Why Home Closing Costs are Necessary?

Home sweet home, is it just a dream? You might feel this way when you are in the final stages of closing and discover the home closing costs. This is an area where many go into sticker shock. So let's take a look at those costs in purchasing a new home.

Don't worry I will clear up your doubts. Everyone's basic need is to have a nice home to live in. While we are waiting for the transactions to be completed, there are miscellaneous expenses that occur in finalizing your purchase known as home closing costs. These include things such as:

deed recording fees
surveys
property taxes
loan origination fees
discount
appraisal
title fees


As you can see from the list, these are necessary items to complete the transaction of buying your new home. Home closing costs are also called settlement costs. When you have a transaction that includes a lender, a borrower, and real estate, then you will have a real estate settlement document to itemize these costs. Many of these cannot be avoided. Although there are some that are negotiable. An example of one is the loan origination fee.

These costs are paid to the lender for the fees that have accumulated to complete the transaction. The mortgage makes it possible for you to make such a large purchase as a home. Thus the lender can establish the principles for you to obtain this large debt from the bank which provides the loan. Any kind of assets can be categorized to assure your ability to pay back this debt. So there are fees involved to qualify you as a good risk. These are part of the mortgage closing costs.

On an average 3% -5% of the purchase price is what you can estimate the home closing costs for buying a home will be. Never oblige yourself for the payment of a mortgage that goes beyond your earnings. I had one young girl ask me about a mortgage she qualified for that was for $300,000. She loved the home but only had a total earnings between her and her fianc? of $50,000 per year. They did not have the earnings to afford this mortgage. They would have found it too much to handle and would soon find themselves loosing the home. So don't commit yourself to a mortgage that you cannot afford. Read the documents carefully before signing.

Within three days of their loan application, a lender should provide you, the buyer, a good faith estimate document, which is the hypothetical rule of the amounts that are to be estimated. But the original regular prices may go beyond this estimation at the final closing. Bring the good faith estimate document with you so you can compare. Also, ask for an updated good faith estimate document just prior to closing.

Normally, the time factor for clearing out these settlements is prior to the closing. Home closing costs are a necessary part of buying a home. Hopefully all your doubts have been cleared and you can proceed with the closing. Enjoy that beautiful home you are about to buy!

Jeffrey Ragan has several years of experience helping people reach their goals and wants to help you learn more about mortgage closing costs and other helpful information on their website, First-Time-Home-Buyer-Solutions.com.