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How To Calculate Closing Costs Before Buying A Property
Dated: March 28 2018
When buying a house, the only cost we consider is the mortgage amount. We tend to forget about various other expenses. On an average, you will spend 3%-5% of your home price on closing costs. For a house, worth $200,000; you will pay $6,000-$10,000 on closing costs which is a hefty amount.
How to Calculate Your Closing Costs?
The lending institution requires you to purchase a homeowner’s insurance plan. You will also need to invest in the lender’s insurance. If you pay less than 20% for down payment, you must also pay the PMI.
It protects you if there are legal issues with the title of your house. The title insurance may cost up to 1% of your property value.
Expect to pay 1%-3% of loan value for processing charges, loan origination fees, and attorney charges. The lender may require you to pre-pay home insurance, property taxes, and mortgage payments for a few months. The money will be saved in an escrow account. Lenders require this sum to ensure that you have enough money to pay the mortgage. The bank will discuss the mortgage-related expenses before you sign the contract.
In some areas of the country, you will also pay for the flood certification. The fee can be $50 or more depending on your region.
Feel free to contact me for information on how to lower the amount of closing costs you pay! We have a solution to make closing costs minimal for you...