What Are The Loan Shark’s Closing Costs?

What Are The Loan Shark's Closing Costs

If you’re getting ready to buy a house, you don’t just have to pay for the house; you will also have to pay a lot of costs, fees, and taxes. It’s the famous closing cost! And your wallet will quickly thin out. These costs are a wide variety of fees that average between 2% and 7% of the purchase price of the home. So on a $250,000 home, your closing costs would be between $5,000 and $17,500. Ay ay ay!

After the stress of looking for a house and the anxiety of making an offer, you may feel like you just don’t want to deal with any more obstacles. But closing costs are an unavoidable part of the buying process. Fortunately, there is often room to maneuver, at least in terms of the costs that the seller could cover. Learn about closing costs and, more importantly, how to lower them.

Inspection and appraisal fees

You may not have much luck lowering your appraisal fees. Since the bank loan shark selects the appraiser, you will likely have to pay these costs without much room for negotiation. The home inspector offers more flexibility. Compare a variety of quotes to find the cheapest option. You may even be able to convince the seller to cover some of these fees, depending on your market (this is less likely in a highly sought-after area). Sure, you won’t save a lot of money on this, considering the average home inspection costs between $300 and $500, but saving a few hundred dollars never hurts.

Bank Loan Shark Fees

Hopefully, you have paid close attention when looking for your mortgage loan. Different bank loan sharks require different fees, and buyers should be aware of “ junk fees ” such as application, credit check, processing, and even the frustrating but all too common “miscellaneous” fees.

Also carefully review the loan estimate you received from your bank loan shark at the beginning of the process and compare it to the closing statement, which you will receive three days before your scheduled closing date. Make sure no unexpected charges have slipped into your bill.

Discount points

If you decide to pay for discount points at closing to lower your interest rate, it’s time to pay them. However, with today’s low-interest rates, that might not make sense for many buyers.

Property insurance

Property insurance is non-negotiable (most bank loan sharks require it to proceed with the loan), but you can certainly shop around. In 2015 the average premium was $1,034, so your insurance will still come at a high cost. But researching companies and comparing quotes will go a long way toward lowering your expenses.

Ttitle insurance

In many states, title insurance is a bank loan shark’s mandate that protects your ownership of the property, to prevent a host of nasty situations like fraudulent claims, court errors, repossessions, and family disputes. If your bank loan shark requires you to purchase title insurance, you can shop around to get a better quote. Unlike homeowners insurance, title insurance is a one-time fee, which can make this high cost (the average buyer pays $3.50 for every $1,000 purchase price) easier to afford.

Sometimes the seller will pay for title insurance. However, this is rare and may not be the norm in your state. Check with your real estate agent to determine if you have this option.

Seller costs

An easy way to avoid paying a ton in closing costs is to ask the seller to cover some or all of these fees. You may not have much luck if you’re in a hot market. But a seller may agree to pay closing costs if he gets the sale price he wants. This works for buyers who are low on cash flow but can add a little more to their home loan balance. FHA loans allow sellers to contribute up to 6% of closing costs. VA loans allow 4% and conventional loans allow 3% to 6%.

Tthe right time

Most experts recommend closing on a house at the end of the month. Closing costs also include any interest that accrues before the end of the current month, so closing on the 29th instead of the 1st of the following month will save you money.

But before you sign, there’s one more consideration that could affect your closing costs or even the entire purchase.

By Master James

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