| Closing costs are often the last thing a | | | | you have excellent credit, you can shop for a |
| person thinks of when buying a home. While | | | | loan that doesn't require you to pay points. |
| closing is the joyous moment the home becomes | | | | |
| yours, the costs can be surprisingly | | | | Home and Title Insurance |
| aggravating. | | | | |
| | | | Insurance for your home and title are a must. |
| When you purchase a home, condo or other | | | | If you are borrowing money to purchase the |
| property, you will go through a period known | | | | home, each is mandatory. If you are using |
| as escrow. During escrow, various issues | | | | your own funds, you should still get both |
| related to the property transfer are worked | | | | forms of insurance. As each name implies, |
| out. The last day of escrow is known as the | | | | they provide insurance against issues |
| closing day and you are going to be paying | | | | involving your home and problems with the |
| closing costs. | | | | title transferred to you. You want to have |
| | | | clear title. |
| Closing costs come in many forms. Some | | | | |
| involve significant dollars while others are | | | | PMI |
| relatively painless. Here's a list of typical | | | | |
| costs: | | | | Private Mortgage Insurance, "PMI", is |
| | | | mandatory if your down payment is less than |
| Escrow Fees | | | | 20% of the purchase price. You can expect to |
| | | | pay a few hundred dollars a year in PMI. |
| An escrow agent is essentially a third party | | | | |
| that works with the seller and buyer to | | | | Inspections, Appraisals and Miscellaneous |
| finalize the transaction. For this | | | | Fees |
| assistance, the escrow agent will charge a | | | | |
| fee. Depending on your area and the agent, | | | | In the home purchase process, you are going |
| you can expect fees from a few hundred | | | | to use a variety of services to validate the |
| dollars to around a thousand or so. Make sure | | | | property is your dream home. These services |
| you find out the fees before picking an | | | | come with fees and you can expect to pay for |
| escrow agent. | | | | home inspectors, appraisers and the like. |
| | | | Depending upon the state you live in, many of |
| Home Loan | | | | these fees may be built into your mortgage. |
| | | | Nonetheless, you need to know exactly what |
| Obtaining a home loan in the current market | | | | you must pay for on closing day so you can |
| is a highly subjective event. "Points" can be | | | | budget accordingly. |
| a major cost associated with home loans. | | | | |
| Points are essentially a fee you pay or have | | | | Closing escrow should be one of the happier |
| build into the loan for the privilege of | | | | days in your life, particularly if it is for |
| being allowed to borrow money. A point | | | | your first home. Make sure you know the costs |
| usually equates to 1% of the loan. On a loan | | | | associated with it so you don't have to spend |
| of $300,000, one point would equal $3,000. If | | | | the day running around borrowing money. |