Confused By Closing Costs?

Closing costs are one of those things that some people may not understand and many people are unaware of until they receive the sticker shock upon seeing the amount of money they need to bring to the table due to closing costs. Depending on the type of loan, the amount of the loan, or the terms of the home purchase closing costs can greatly vary. With the way the home loan process works often times closing costs are not known until close to the actual closing date. With this article I will explain some of the terminology associated with closing cost line item charges and present some ideas on how to minimize your out of pocket expenses when it comes to closing costs.  By being familiar with closing cost terminology and possible ways to reduce those costs perhaps you can learn how to avoid closing cost sticker shock.

Terminology

Any discussion about closing costs should begin with defining certain terminology. Not every term in here will be seen in every closing. Depending on the type of loan and other facts some of the terms may not apply to your individual scenario.  With any fee being charged by the lender you should ask what those fees are and are they necessary. Some fees can be negotiated away or you may be able to find other lenders who do not charge those same fees.

Appraisal Fees: Appraisal Fees are fees charged by the lender to hire an Appraiser to give a value estimate of the home you wish to purchase. Lenders generally want to lend money where the amount being borrowed is less than the value of the home and land that is being purchased. Where the amount of the mortgage...