If you are in the process of buying your first home, you may think it’s as simple as finding a monthly mortgage you can afford. However, there are costs associated with buying a house that go beyond your mortgage payment, and they are referred to as “closing costs.” Today on the blog, our team at GVC Mortgage is discussing all of the fees to be paid on closing day so you can be prepared, and not experience any delays or disappointments.
Depending on the type of loan you have secured, you may be asked to pay a down payment upfront. If you choose a conventional or FHA loan, a down payment will be required, and the amount is based on the home’s price, property type, as well as the loan itself. There are loan types, such as USDA loans, that do not require a down payment, but your loan officer will let you know ahead of time what is expected.
There are also several miscellaneous fees that are grouped together and must be paid before you get the keys to your new property. Typically these costs range from 2 to 5 percent of the loan principal and can include
- Application fee
- Appraisal fee
- Credit check fee
- Underwriting fees
- Title insurance
- Title search fee
Often, these closing costs are discussed in the negotiation process, and the sellers might offer to pay them as part of the deal. Otherwise, you may be able to add them to your loan principal to save you from bringing cash to the closing. However, this ends up costing you more in the long run, as these fees will be subject to a higher interest rate.
Finally, you may be asked to pay property taxes, homeowners insurance, and HOA fees on closing day. Each of these fees is subject to different rules and regulations depending on where you live and may fluctuate as long as you own your home. To further understand these fees, speak with your loan officer before closing day, and make sure to get all of your questions answered.
Once all of the fees are negotiated and paid, you will finally be handed the keys to your brand-new home! If you still have questions about any part of the home buying process, give our team a call. GVC Mortgage will put you first, and get you into the home of your dreams. Contact us today in Indianapolis at (317) 564-4906.