When you purchase a new home, you must prepare financially for more than just a down payment. There are several additional expenses that you must pay for including closings costs. Closing costs are essentially numerous fees that have incurred during the home-buying process. For most homebuyers, they will pay between 2% to 5% of the home’s purchase price just in these fees. Let’s take a look at just a small handful of closing costs you should prepare for.
1. Credit Report
Your credit report plays a significant role in the home-buying process. It will affect your interest rate and even helps determine if you will be approved for a mortgage or not. You may need to pay for the lenders to acquire this report.
2. Home Inspection
In most cases, the cost of your home inspection will be included in the closing costs of the home. Many house hunters choose to skip the inspection to cut down on these costs but that could end up costing you more in the long-run.
3. Lender’s Fees
Your closing costs will cover a number of fees from your lender. This includes the application fee which covers the cost of processing the loan application. The origination fee pays for much of the work that is completed by the lender. This fee can vary but is usually between 0.5% and 1% of the purchase price of the home and is one of the larger fees you will pay. You may also have to pay underwriting fees that will go to the lender to cover the cost of underwriting and research.
This is simply a fee to pay for an appraisal to be completed on the home. This ensures that the price of the home is fair and you aren’t paying too much or too little for the property. If this number is not correct, your loan could be denied.
There are several taxes that are included in your closing costs. These include a transfer tax which is when you transfer the home from one party to another. You also may need to pay any property taxes that are due shortly after purchasing the home.
These are just a small handful of the closing costs you can expect to pay when you purchase your dream Collingwood home. If you have more questions or concerns about this process, contact your local real estate agent Christine Smith who can help you find your dream home and assist you throughout the entire home-buying process.