Out of the entire home buying process, closing costs can often the least understood pieces. At Grand Avenue Realty & Lending, we will take the time to address your questions and guide you to answers.
Although they tend to vary from lender to lender, closing costs generally are considered any costs tied to the purchases of a new home. Today, these costs range from 2 and 7 percent of the home’s purchase price and include three basic categories:
Prepaid expenses include homeowner’s insurance, mortgage insurance and the costs to set up an escrow account. An escrow account is when a lender will pay the annual insurance premiums and various taxes on the borrower’s behalf. The amount that goes into this account is based on the first year’s premiums; an additional amount also is included to pay for future premiums. Because they vary based on the type of property and the time of the closing, prepaid expenses are difficult to determine.
A mortgage point is equal to 1 percent of the mortgage loan amount and actually helps reduce the loan’s interest rate. For example, depending on prevailing rates, a $100,000 mortgage might be obtained at 7.75 percent with 2 points, or at 8.25 percent with no points. Obtaining the lower interest rate would cut the mortgage payment by about $35 a month, but would require $2,000 — or 2 points — up front at closing.
Fees for appraisals, attorneys, credit reports, deed recording, tax services and other miscellaneous expenses make up the out-of-pocket expenses. Usually performed by a third party, these fees for services are directly charged to the borrower. The majority of out-of-pocket fees are necessary and legitimate; however, if the borrower encounters a fee that causes confusion, he or she should ask the mortgage professional about it.
Purchasing a home is one of the largest financial investments you can make. It’s vital that you understand it fully and completely so that you avoid unwelcomed surprises and are confident in every step you take towards your new home.
You need mortgage professionals you can trust. You need a company that values honesty and integrity throughout the entire organization. You need mortgage planning specialists who give you their best consistently. You need to find strength, stability and opportunity—especially now. You need New Century Realty & Lending!
When dealing with your home financing, we are not only working with one of your largest personal financial investments; we also are handling one of your biggest dreams. Since we work with matters so close to the heart, we serve you from ours.
New Century Realty & Lending can meet you where you are and help you where you are going. Let us provide you a mortgage without obstacles.