{"id":19447,"date":"2023-04-05T00:05:41","date_gmt":"2023-04-05T00:05:41","guid":{"rendered":"https:\/\/woodriverweekly.com\/?p=19447"},"modified":"2023-04-04T19:08:14","modified_gmt":"2023-04-04T19:08:14","slug":"tell-me-more-about-closing-costs","status":"publish","type":"post","link":"https:\/\/woodriverweekly.com\/index.php\/2023\/04\/05\/tell-me-more-about-closing-costs\/","title":{"rendered":"Tell Me More About Closing Costs"},"content":{"rendered":"

BY ANNA & MICHELLE<\/em><\/p>\n

There are fees and expenses associated with mortgages that must be paid by the closing date for closing costs, and pre-paid items, in addition to the down payment.\u00a0These amounts can vary according to the type of loan, mortgage company, customary practices of the area, and the terms of the contact.
\nAccording to Freddie Mac, the amounts could vary between 2%\u20135%, which is considerable.\u00a0Most buyers want a more specific number and that can depend on the conditions mentioned previously.
\nFor buyers, the largest amounts are loan origination fees, which is usually 1% of the amount borrowed; points paid by buyer, which are 1% or more of the mortgage amount; owner\u2019s title policy if paid by the buyer; and the pre-paid items mentioned above.
\nCertain types of mortgages allow the seller to pay specific closing costs for the buyer with full disclosure in the sales contract.\u00a0For example, all the buyers\u2019 closing costs can be paid by the seller for VA mortgages up to 4% of the sales price.\u00a0FHA and USDA allow sellers to pay up to 6% of the sales price to be used for closing costs and pre-paid items.
\nFor conventional loans, underwritten by Fannie Mae or Freddie Mac, sellers can contribute up to 3% if the down payment is less than 10% and up to 6% if the down payment is 10%\u201325%.
\nAsking a seller to pay a buyer\u2019s closing costs is tantamount to lowering the price of the home.\u00a0In a highly competitive market, the seller may be less willing to pay a buyer\u2019s closing cost than in a soft market.
\nSettlement dates affect the amount of pre-paid interest.\u00a0Mortgage interest is paid in arrears, after the money has been used.\u00a0The principal and interest portion of the payment is allocated to pay for the interest on the principal balance for the previous month and the remainder is applied to reduce the principal of the loan.\u00a0Each succeeding payment has less going to interest and more going to principal until the loan is fully retired.
\nWhen a buyer closes on the sale of a home, the first payment will not be due until the first of the month following the next full month after closing.\u00a0The buyer is also responsible for interest from the funding date, usually at closing.\u00a0This amount is usually reflected on the buyer\u2019s closing statement, as interest to the end of the month.\u00a0It pre-pays the interest from closing until the next first of the month.
\nIf the buyer closed on the second\u00a0of the month, the pre-paid interest would be far greater than if the buyer had closed on the last day of the month.\u00a0To minimize this out-of-pocket expense, many times closings will be scheduled toward the end of the month.
\nAnother large buyer\u2019s closing cost is property insurance.\u00a0The lender will require that the home be insured for at least the amount of the mortgage being borrowed.\u00a0Insurance must be paid for in advance, usually at closing.\u00a0In addition to the annual premium, the lender may require an escrow account be established to collect 1\/12 of the annual property taxes and property insurance to be paid with the payment so there is enough money in the account to pay them when they are due.
\nWhen setting up the account, the lender may require an additional two months of reserves for the insurance to be renewed in advance of the policy expiring.
\nThe amount of reserves for the taxes depends on when the taxes must be paid.\u00a0At closing, the seller will credit the buyer with the amount of taxes from January 1 to the closing date since taxes are also paid in arrears.\u00a0The lender will probably have the buyer pay two to three months\u2019 taxes additionally at closing so the tax bill can also be paid before it is due.\u00a0Some states give the taxpayer a discount for paying them in advance.
\nYour real estate agent will be able to give you an estimate of closing costs that should prepare you to purchase a home.\u00a0The lender is required by law to supply you with a\u00a0Loan Estimate\u00a0within three days of receiving your loan application.
\nA\u00a0Closing Disclosure\u00a0will provide the final details of the mortgage loan you have selected.\u00a0It includes loan terms, estimated monthly payment, and the fees and other costs incurred with the mortgage.\u00a0You must receive it three business days before you close on the mortgage loan so that you can compare it with the Loan Estimate.<\/p>\n

\"\"<\/p>\n","protected":false},"excerpt":{"rendered":"

BY ANNA & MICHELLE There are fees and expenses associated with mortgages that must be paid by the closing date for closing costs, and pre-paid items, in addition to the down payment.\u00a0These amounts can vary according to the type of loan, mortgage company, customary practices of the area, and the terms of the contact. According […]<\/p>\n","protected":false},"author":1,"featured_media":19448,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","_pvb_checkbox_block_on_post":false,"footnotes":""},"categories":[64,38],"tags":[],"class_list":["post-19447","post","type-post","status-publish","format-standard","has-post-thumbnail","category-better-homeowners-news","category-sponsored"],"_links":{"self":[{"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/posts\/19447","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/comments?post=19447"}],"version-history":[{"count":1,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/posts\/19447\/revisions"}],"predecessor-version":[{"id":19449,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/posts\/19447\/revisions\/19449"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/media\/19448"}],"wp:attachment":[{"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/media?parent=19447"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/categories?post=19447"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/tags?post=19447"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}