Jennifer Hershey has more than twenty years of experience in the Mortgage Industry as a loan officer and as a mortgage broker. She is the owner of http://www.explainingmortgages.com/, a mortgage educational site devoted to making mortgage terms and products easy to understand.
When it comes time for you to purchase a new home or refinance the one you are living in, you cannot forget about the closing costs.
Closing costs consist of no more than 5% of the total amount of the loan, so when you are sitting down to figure out your financial situation to get a grasp on what you can afford and what percentage you can put down, don’t forget to factor in the closing costs.
The closing costs you will pay are a one time fee that in no way can be avoided, so be prepared to pay them.
Closing costs consist of loan origination fees’, escrow fees’, home owner’s insurance, title insurance, property tax, property inspection, the appraisal fee, etc.
As you can see, you will be responsible for paying quite a pretty penny before you even step foot in your new home or even refinance your existing one.
For the sake of those refinancing, the closing costs are usually taken out of the equity in the home. Of course the choice is yours and you are made well aware of this up front.
Closing costs are sometimes misunderstood by the consumer. It is important to understand that not all of the fee’s are being collected by the lender. Generally the application fee and the loan origination fee go to the lender while the other costs are distributed to the appropriate institutions.
Unfortunately for the consumer, nobody works for free. So there is no way of getting around these fees. So be prepared to factor the closing cost’s into the scenario while you are determining your spending power.
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