Buying a home usually means learning a lot of new jargon and absorbing a lot of new information. “Closing costs” are just part of that new set of jargon that you will have to learn. With so much else to learn and an assurance that closing costs will just be rolled into the cost of the mortgage, many people will just ignore these expenses until the very end of the home-buying process. The truth is, closing costs can make or break a home purchase and knowing what these costs are and why they are included is important. Here are some of the most common closing costs with a mortgage:
Mortgage application fees – While these fees might be paid before closing, they are often included in the closing costs. This is the fee charged by the lender for reviewing and processing the original mortgage application.
Fees for inspections – Having your future home inspected before you actually purchase it is extremely important. It does, however, cost money for all involved parties. The inspector has to be paid for his time, and while this fee, too, is sometimes paid before closing on a mortgage, it is most often rolled into the closing costs.
Fees for appraisal – Having a house appraised is just as important as having that house inspected. This ensures that you are not paying an outlandish price for a house that is actually worth much less. Like an inspector, having an appraiser come out to the property to survey it costs money, and someone has to pay for that time. It is usually the person buying the home. This cost, like the others, is often part of the closing costs.
Title search, recording, and surveying – If the property you want to purchase has had any of these services before you actually make the purchase, the cost of having these services done, like the others, will be rolled into the closing costs.
Commission for your real estate agent – Your real estate agent is usually paid on commission, and that payment is most often made when the mortgage closes.
While closing costs can seem steep, they are often the price that a buyer has to pay to actually purchase the home. They cover a range of important services and can often be mitigated by having the costs rolled into the mortgage itself.