What are Closing Costs?

Embarking on a house-hunting adventure can be incredibly thrilling, but it’s important to prepare for all associated costs beyond just the moving expenses and mortgage payments. One key aspect to consider is closing costs, which are additional fees incurred during the finalization of your mortgage. To ensure you’re financially prepared, make sure to factor these into your budget.

What Are Closing Costs?

Closing costs are various expenses you need to settle to complete your mortgage transaction. To get a clearer idea of these costs, speak with us directly or use a closing costs calculator, keeping in mind that estimates can vary by state.

Typically, closing costs are the responsibility of the buyer, although sellers also have their own expenses, such as paying the real estate agent’s commission.

Understanding Your Loan Estimate

Familiarizing yourself with your loan estimate helps in budgeting and avoiding unexpected surprises when you finalize your mortgage. After receiving your mortgage quote and pre-approval, the next step is to review and sign a Loan Estimate. This document outlines the anticipated costs of your loan, though final fees may differ.

How Much Are Closing Costs?

The amount you pay in closing costs largely depends on your loan amount and interest rate. Sometimes, you might have to pay a premium, while other times, you could receive a credit for accepting a higher interest rate. We can connect you with lenders who fit your specific needs. For first-time buyers, there might be loan programs or grants available to assist with these expenses.

Once you know your estimated closing costs, you have two options: pay them upfront as a one-time expense or finance them by adding them to your loan. Opting to fold them into your loan could result in higher monthly mortgage payments.

Types of Closing Costs

Property-Related Expenses:

1. Appraisal Fee: Your lender might require a professional appraisal to confirm the property’s market value, unless this requirement is waived.
2. Home Inspection: Often required by your insurance company to obtain homeowners insurance.
3. Survey: Typically required by the title company for new home purchases, though condos are usually exempt.

Loan-Related Fees:

1. Underwriting Fee: For assessing the loan application.
2. Origination and Processing Fees: For setting up the loan.
3. State Recording Fee: For registering the mortgage with local authorities.
4. Title Insurance: To protect against future claims on the property.
5. Prepaid Items: Such as property taxes and insurance.
6. Transfer Taxes: Potentially applicable in some states.

Additional Expenses:

1. Mortgage insurance fees
2. Title fees
3. Credit report fees
4. Insurance costs
5. Property taxes

For more details, you can consult resources like Nerdwallet or use the closing cost calculator linked earlier.

Closing Disclosures and Final Costs

To gain a better understanding of your mortgage’s final costs, including the closing disclosure, which provides a more precise breakdown, please contact us. This document should closely match your final costs and help clarify any remaining questions.

As your mortgage broker in Florida, we’re here to address any questions and support you through your home-buying journey.