What Are Closing Costs?
When you purchase a home, you will have closing costs. Closing costs are fees that are associated with your home purchase. These fees can vary based on the type of property you are purchasing. Some first-time homebuyers forget about closing costs; don’t let them sneak up on you.
If you are first time homebuyer, your closing costs are broken down into two main categories: (1) mortgage; (2) escrow and title.
Your mortgage closing costs can be:
- The balance of your down payment
- Mortgage points
- The cost of the appraisal
- Loan processing fees
Your escrow and title costs can be:
- Title insurance
- Escrow service
- Attorney fees for drafting of the deed
- Recording fees
When you get prequalified, your mortgage lender should account for closing costs. If you enter escrow, your escrow officer and mortgage lender can give you a more accurate number on what your closing costs will be. Prior to signing you closing documents, your lender and your escrow officer will send you closing disclosure and an estimated settlement statement to your credits and debits.
Lastly, did you know that some escrow companies offer discounts for first time homebuyers? Don't forget to ask. Any discount can be helpful!