Understanding closing costs on your home
When it comes to buying a house it can be a hectic and long process. The final moment of closing the deal brings relief! When this final step happens, you know the home is finally yours!
During the close you just need to meet with various legal representatives to sign your mortgage and other documents and receive the keys to your new property. It’s important to understand all of the rates and billing beforehand to clear any confusion. Oftentimes, buyers don’t realize they need to contribute beyond the down payment.
The term "closing costs" is uncertain. Skip the last-minute panic and understand from your Omaha real estate agent the notion behind “closing costs.”
You need to conduct the closing at one of the representative’s house. Below are the procedures you should follow in:
- Make sure your lawyer or agent is present. They will be able to explain confusing terminology and walk you through the process with a better understanding. You need to review and sign all your loan documents. You need to go through all the documents thoroughly. If something is different from what you expected or agreed to, don’t sign until you resolve the issue.
- You need to provide documentation of homeowner’s insurance and inspections. This step has to happen before you are issued the mortgage.
- You give a certified or cashier’s check to cover the down payment (if applicable), closing costs, prepaid interest, taxes and insurance. You could also send these funds in advance through a wire transfer.
- Your lender distributes the funds covering your home loan amount to the closing agent. Remember, to use a certified or cashier’s check from your selected bank. It’s important to review the settlement statement 24 hours before the closing. This way if anything changes on the loan or closing amount, they can be made.
- Depending on your loan terms, you may also be required to set up an escrow (or impound) account to cover property taxes and homeowner’s insurance in addition to your monthly mortgage payment.
Summing up the closing cost
- You need to be aware of the appraisal fee. Also, make sure you know whether the property is worthy of the amount being borrowed. Two reasons: the bank needs to verify the amount you need for a loan is justified, and wants to make sure it can recoup the value of the home if you default on your loan. The average cost of a home appraisal by a certified professional appraiser ranges between $300 and $500.
- Most lenders require a home inspection for banking purposes and this verifies the home is worth what the seller is asking. An average home inspection fee is $300 to $500.
- If you work with a mortgage broker to find a loan, the broker will usually charge a commission as a percentage of the loan amount. The commission averages from 1 percent to 2 percent of the home’s purchase price.
- According to the Genworth and Urban Institute, you can expect to pay 0.55 percent to 2.25 percent of the purchase price for mortgage insurance.
Along with this, there are a number of other closing costs. These are the most commonly known and needed ones to seal the deal with your Omaha real estate agent.
Don't worry, our team will guide you through the entire process of closing costs and information! Contact the Fairfield Team and we can help you get started on hunting for your new home!