When it comes to the mortgage process, one of the areas that many first-timers worry most about is closing costs. These are costs outside your down payment amount, and due to a general lack of knowledge about them, many buyers aren’t sure what to expect.
At Primary Residential Mortgage in Fort Myers, we’re here to help. Here are all the basics you need to know about home loan closing costs.
Closing costs include all additional expenses beyond the purchase price of the home. These may include origination fees, property taxes, escrow costs, appraisal fees, title insurance, and several other possible areas depending on the type of loan you receive.
In most cases, closing costs will make up about two to five percent of the total purchase price of the home. So if your home costs $200,000, the closing costs will range from $4,000 to $10,000. However, these will vary between states and even between lenders, and can also change based on the types of fees. Here are some of the fee types that may be included, in alphabetical order:
Now, you won’t necessarily be faced with all these fees. Within three days of submitting your loan, you’ll receive an estimate of your final closing costs from your lender. No later than three days before closing, you’ll receive a closing disclosure, which will list the exact closing costs and when you’re expected to provide them.
There are several online calculators available to calculate your APR (annual percentage rate) based on various interest rates or closing costs. There are also payment calculators that can help you make your monthly payments simpler.