Anna 'Banana' Kruchten has established a new ActiveRain contest in which we are to respond to the 10 most frequently asked questions that we are asked, and we are to do this in 10 different blogs. My first blog was "What Do I Need To Do To Get Pre-Qualified For A Mortgage". Today's blog will be about a question that I get more often than you might think.
FAQ #2 ....... What Do You Mean I Need Money For Closing Costs?
First Time Homebuyers know that money is needed for Downpayment. What many of them don't realize is that they will also need money for Closing Costs. Even for those who are not surprised to hear that they they will have to pay Closings Costs, they are surprised to hear that Closing Costs can run them several thousand dollars. Yes, there are ways to cover the Closing Costs and Downpayment without using their own funds, but it is the surprise that there will be funds needed other than Downpayment that is unexpected.
I am always prepared for silence that follows when we reach this point in the Pre-Approval Process, and I know that I have to take the time to fully explain it. When Closing Costs are explained correctly, and they understand it, the initial shock goes away, and the discussion turns to how to best handle these unexpected costs. That discussion might be the topic of a future FAQ blog, but for now I want to give a rundown of Closing Costs that are common to all mortgages. Let me also stop and state at this point, that for the purpose of this blog the term Closing Costs is an all inclusive one, it includes Prepaid Costs as well. Borrowers don't care what category the costs fall into, they just want to know what they are for and what is their total cost.
- Application Fee/Processing Fee
- Appraisal Fee
- Attorney Fee
- Title Insurance Fee
- Recording Fees
- Daily Interest Charge
- Homeowners Insurance
- Escrows:
- Taxes
- Homeowners
There could be other Closing Costs such as:
- Points
- Credit Report
- Flood Certification
- Funding Fees
- Condo Questionnaire Fee
- Re-inspection Fee
To just name a few, but the first list of fees are common to every mortgage. These costs can easily add up to several thousand dollars regardless of the loan size, because many are fixed cost. Looking at the fees above someone might say, well they don't have to escrow for taxes and insurance, but I don't know of a lender around here that will not require that they be escrowed these days
I had planned on my next FAQ's blog to be about Credit Scores. But while listing the above fees, it reminded me of a question that always comes up with regard to insurance fees. So I think that will be the topic of the next FAQ's blog
Previous FAQ's Blogs.
"What Do I Need To Do To Get Pre-Qualified For A Mortgage"
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
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