What are Closing Costs and What do They Include?

Isra Ziade

Isra Ziade

Isra is the Marketing Director of EZ Fundings Home Loans who loves to share good vibes and mortgage tips and market updates to people. As a Mortgage Mama, she desires to bring families home just like her own family. She is also a Glow and Grow Mentor.

Closing costs

Once you buy a home, you will have to budget for closing costs. Mortgage closing cost includes expenses and fees that you pay when you secure a home loan. The closing costs are beyond the down payment. This cost is beyond three to five percent of the loan amount. If you’re wondering what’s included in the closing cost, then read on to find out.

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Closing Costs

Here is a detailed review of the main closing costs:

Loan Origination Fee

The loan origination fee includes the fee for loan processing and underwriting, which is around 0.5 percent of the loan.

Home Appraisal and Survey Fees

You may have to carry out a home appraisal to confirm the house’s current market value. Though the fees may vary for this service, it may cost you several hundred dollars.

Private Mortgage Insurance

As a home buyer, you may have to pay private mortgage insurance (PMI) if you make a down payment of less than 20% on your conventional loan. You will have to incur this cost at closing because PMI is primarily designed to protect the lender against losses if you can’t repay the loan or default on loan.

Mortgage Points

This is paid to the lender directly at the closing time, too, in exchange for a low mortgage interest rate. Mortgage points are also called discount points.

Property Tax

Property tax is yet another cost that you will incur at closing. Most often, home buyers have to pay six months of advance tax. Here it is important to understand that taxes are variable by location. Also, once the loan closes, the property is reassessed which could increase the real estate tax too.

Escrow Fee

You will have to pay the escrow fee to the agent who helps you close. The fee is variable, but it will generally cost you around 1 or 2 percent of the sale price.

For more information about closing costs, contact us today. Our experts can provide you with complete details and quality guidance.

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