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- What are Closing Costs?
Closing costs are simply the fees, costs and taxes associated with the purchasing of a
home, the borrowing of money and the preparation of necessary paperwork to finalize the
sale. The total amount of your closing costs will vary depending on where your new home
will be located, what type of property you are buying, the price of the home and the
complexity of the transaction. It is extremely important that you work closely with your
Realtor and lender in the early stages of the home buying process to determine what these
costs could be, since closing costs can easily represent thousands of dollars.
The main categories are:
Discounts Points to Buying Down the Mortgage
This fee is optional and can vary significantly from 0.5 to 3 points on the total of the
mortgage. It is a one-time charge that is calculated based on the amount of the mortgage
loan. A buyer would pay this amount up front to reduce the ongoing cost of the mortgage
over the life of the loan. This charge is fully deductible as mortgage interest.
The Costs of Originating the Mortgage
These generally include a variety of fees such as the loan origination fee, the appraisal
fee and the cost of credit reports. There are also other fees that you will be expected to
pay at closing such as hazard and mortgage insurance and interest accrued on the mortgage
between closing date and the end of the month.
Taxes and other Local Fees
These charges will vary according to the requirements of local governments. Some may
demand that your property taxes be pro-rated according to when you will officially become
the owner of the house. There can also be personal property taxes, homeowner's association
dues, and other assessments that are specific to the area that you are moving into.
The Cost of Documentation
You will have to pay for any research involving public records and the title history on
the property you are buying. This insures that the title on your property is unencumbered
by other ownership or liens and can be delivered to you at closing. Other costs include
Recording and Transfer fees that cover the legal recording of the deed to your name.
It is critical that you have a clear understanding of the total cost of your closing. Your
real estate agent should supply you with a detailed estimate well in advance of the actual
closing.
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Sherry
Cleveland Frye
(205) 266-6684 Direct (205)
313-8500 Office
Email:
sherryfrye@bellsouth.net
RE/MAX
Southern Homes |
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- Copyright 1999-2006 All rights reserved
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