Don't Forget About the Closing Costs When Applying for a Home Loan!
Some tips you should know when you are ready to buy and applying for a loan~
You’ve faithfully saved for that dream home down payment….but don’t forsake saving for the closing costs. Prepare for them to be 2- 5% of the purchase price.
Lenders are required to provide a buyer with a “Good Faith Estimate” within 3 days of a loan application submission. This estimate summarizes the details of the loan and anticipated closing costs. These costs will vary from lender and broker.
Common closing costs include loan application fees, points, prepaid homeowners' insurance, an appraisal fee, inspection fees, transfer taxes, escrow fees, attorney fees, recording fees, prepaid interest , prepaid private mortgage insurance, title insurance, and title search costs. Other costs include the cost of obtaining a credit report, processing fees, courier fees and paperwork preparation fees. (Investinganswers.com)
Homebuyers should receive a closing disclosure 3 days before the estimated closing date on their home. The statement includes final details about the loan and the closing costs.
*Conventional loans do not offer buyer assistance with closing costs but inquire with your lender options available with FHA and VA loans to include a portion if not all of the closing costs within your loan to avoid having to come up with thousands more at closing. Keep in mind this will increase your principal loan balance and consequently, your monthly payment.
*Talk with your REALTOR® while you are considering the offer you want to make on a home. Consider asking for a seller credit at closing towards the buyer’s closing costs. This request may need to be reflective of your offer price in order to maintain favorable terms. Your offering price will become increasingly important if you are not the only buyer with interest in the property and there is a high likelihood that there will be multiple offers for the seller to consider.
Speak with your lender early and determine how much you’ll be responsible for at closing. Unwelcomed surprises are not always avoidable in a real estate transaction but with a reliable agent and a good lender, lack of communication will never be the cause of disaster.
Consider us at San Luis Obispo Realty where we pride ourselves on sticking with you through every detail of your transaction!