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Understanding Closing Costs

When purchasing or refinancing a home, the final step in the process is the closing. It’s important to keep in mind that there will be additional costs associated with closing on your home. If you are a first time homebuyer, you’re probably aware that you need to save money for a down payment, but you may not realize the full costs associated with closing, and they typically run anywhere between 3 – 6 percent* of your approved loan amount.

So What Are Closing Costs?

The term “closing costs” is a bit vague but essentially straight forward.  These are the costs incurred at the closing of your mortgage. They may include:

  • Loan origination fees
  • Appraisal fees
  • Title searches
  • Insurance
  • Taxes
  • Credit report charges
  • Any other fees and expenses incurred

Why Are Closing Costs Necessary?

While no one looks forward to additional costs, the fees actually benefit you. Title searches and other fees help protect you so that you know you have legal possession of your home.

Who pays for the Closing Costs?

For the most part, you as the buyer will pay for the closing costs. However, depending on the loan product, some of the costs may be absorbed by other parties. For instance, with VA loans there are limits to what buyers pay in closing costs.

 

CHECK OUT OUR MORTGAGE CALCULATORS

 

*percentages listed are an estimate and may not reflect the percentage rate you will pay.

Finding A Starter Home In A Competitive Market

So you’re ready to purchase your first home. Congratulations! However, after beginning your search you may find yourself wondering, where in the world are all the starter homes?

It’s a valid question to ask considering there is somewhat of a starter home shortage in many popular housing markets. Housing inventory is pretty low and that is making home prices soar. Not a great combination for first time homebuyers.

Not all hope is lost, however! Even though the market is extremely competitive, there are still a few things you can do that will put you ahead of the pack. Check out our tips below:

  1. Get Pre-Approved

Buying in today’s market is competitive so having a pre-approval letter will help you stand out as a serious buyer to sellers.

  1. Keep an Open Mind

Your first home may not necessarily be your dream home, and that’s OK! Many first time home buyers don’t plan on staying in their first homes forever; rather, they use the home as a financial launch pad for a bigger home in the future.

  1. Use a Real Estate Agent

There’s a lot to be said about using a professional. First time homebuyers really need help from someone who knows the area when dealing with competitive markets. A great agent will know how to negotiate and they can help you with realistic expectations.

  1. Understand Your Needs

Location is a big g factor for many buyers, and sometimes affordability has to be compromised when purchasing in a hot part of town. Alternatively, an affordable home in a less desirable location could leave you compromising on commutes to work or social life. Only you can decide what’s most important to you.

  1. Make a Good Offer

You’ve found an amazing home in a desirable location at a great price, now what? Well, if you found the perfect home, other potential buyers probably have their eye on it. With your pre-approval in hand, make a strong offer!