Many people wonder what closing costs are. Well, these are costs that are associated when the title of a house is transferred from the seller to the buyer. These costs are either paid by the seller or the buyer. These costs will always vary depending on where the property is located, and the type of property it is. Closing costs include the following fees:
•A fee for running your credit report
•A loan origination fee, which lenders charge for processing the loan paperwork for you
•Charges for any inspection required or requested by the lender or you
•Discount points, which are fees you pay in exchange for a lower interest rate
•Title search fees
So, what do closing costs actually cost? Well, generally a buyer can expect to pay between three to nine percent of the price of the house in these fees. Know that your lender is absolutely required legally to tell you an estimate of how much these costs will be (called a good faith estimate). They are legally required to show you this estimate within four days of applying for the loan. Again, remember that this document is an estimate, and they cannot fully determine how much the closing costs will be. See: 5 Ways to Lower Your Closing Costs – FORBES.
Then, within one day of the closing, your bank has to give you a settlement statement that details each closing fee that you have to pay, and the amount. Sometimes, you can negotiate some of these. It is important to talk to your lender, and try to get them down on the prices for these fees. If you can’t get them to go down at all, and you find the amount unreasonable, you are welcome to find another bank lender for your mortgage. Read: http://abcnews.go.com/GMA/Business/story?id=1704406 – ABC News.
Can I avoid them?
If you’re wondering if you can avoid having to pay closing fees, the answer is yes. You can do this by getting a “no cost” mortgage, meaning you don’t pay any of the closing costs. When lenders offer deals like this, you’ll have to pay a higher interest rate. As they say, nothing free is ever really free! Buyers can, however, negotiate with the seller. Sometimes sellers will pay the fees for you. It all depends. But note that the seller is not required to pay them, so you can’t get frustrated if they say no. For further reading, see: Six Smart Ways to Reduce Closing Costs – Realtor.com