The Closing Process When Buying a Home For The First Time


When you buy a home for the first time you need to make sure that you have money on hand for both the down payment and the closing costs.

Closing costs are the various fees that are accrued during the buying of a house. The closing fees include things like; the fee the lender charges for processing the loan for the home, the fee for the paper work charged by the title company, a mandatory inspection and assessment fees, survey fees, fees for the local governmental office for recording the deed and other miscellaneous fees that are required to seal the deal.

The fee amounts that one has when they close for a home depends on the house that was purchased. The range is usually from 1% to 8% of the house price. The normal fee range is between 2% and 3% on a house deal that is closing. These fees are significant and can add up if you put a down payment down also.

It is recommended when you meet with a lender that they give you a “Good Faith Estimate” before you even do anything. This will give you a ball park figure of what you can expect with all the fees that go into the buying the home process. It is the lender that will actually give you an accurate estimate of your closing costs based on a house you want to buy. Don't forget real estate practices and fees do vary state to state. Where you will reside will determine the fees you pay in accordance to the laws of that state.

You want to make sure you have a good broker to help you with the buying of the house process including guiding you with the closing. If you have a bad or incompetent broker and the interest rates are way too high the bank will give your broker  a kick back called a Yield Spread Premium. To avoid this you want to shop around for a deal that is suited for your needs. If on the Good Faith Estimate you See a Yield Spread Premium you may want to negotiate or go elsewhere to see if you can get a better deal first. 

If for some reason you do not have enough money for the closing costs you can do what they call a “Roll the costs into the Mortgage”. What this means actually is that the closing costs are added to the Mortgage. It is added to the monthly payments until it is paid off. This is good to do only if you are short on cash only after making your down payment.

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Miami Real Estate Agent in South Beach at Keller Williams

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