Understanding Closing Costs

Understanding Closing Costs will help you when buying a new home - credit: rido 123rf com

You’ve set aside some money, established your budget, and are finally ready to begin your new home search. Contrary to popular belief, your down payment isn’t the only up-front payment you have to make before acquiring ownership of your new home. You’re also responsible for paying the fees associated with taxes, your loan, appraisals, and more. Understanding closing costs will help you prepare when you’re ready to buy your new home. It will give you an idea of what to expect, what questions to ask, and how much you’ll need to set aside for closing day.

What are Closing Costs?

Simply, closing costs are the fees you pay when it comes time to close on your home. This occurs at the time the title for the property is transferred to you, the homebuyer. Many fees included in your closing costs come from processing items such as your loan application, title, and legal documents.

What Fees are Included in Closing Costs?

One important thing to understand when buying a new home is that closing costs are not one size fits all. They vary from home to home based on several factors including: location, specifications of the home, and the lender you choose among many others. Here is a breakdown of some of the common costs you can expect to pay at closing.

  • Appraisal: During the appraisal process, an expert will research and provide you with the fair market value of the home. The appraisal fee is paid to the appraisal company for this service.
  • Attorney Fee: The attorney fee covers the cost for your chosen attorney to review your closing documentation and ensure everything outlined in your contract is upheld.
  • Closing or Escrow Fee: This fee is paid to whoever conducts the actual closing of the property. This could be a title company, escrow company, or an attorney.
  • Courier Fee: A fee that covers the cost of transporting documents to complete the closing process as quickly as possible.
  • Home Inspection: The cost to have your home inspected to check for repairs that need to be made before closing.
  • Lender Fees: Includes the cost of processing your loan application and underwriting, pulling your credit history and score, administrative costs, and other fees outlined by your lender in your Good Faith Estimate (GFE).

Start with Your Lender

While these are some of the most common costs associated with closing, make sure to consult your lender. They will provide you with documentation that outlines all fees associated with closing on new homes in your area. For more information about Kerley Family Homes’ financing process, head to our finance page. This is a great starting point where you can begin to research our preferred lenders (Fidelity Bank Mortgage, HomeStar, and Southeast Mortgage) to determine which lender you would like to work with when buying your new home.

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