Closing Costs

• Various fees associated with a home purchase are called “closing costs.”
• Both buyers and sellers usually pay closing costs.  Ask your real estate agent about which you’re responsible for.
• Sellers’ costs include:
  1. Paying off loan charges
  2. Brokerage fee
  3. Closing Fee
  4. Title insurance and escrow fee
  5. All or part of a home protection plan.
• Buyers’ costs include:
  1. Home loan fees
  2. Title insurance
  3. Inspector fees
  4. Mortgage insurance
  5. Attorneys’ fees
  6. Hazard insurance.

• To qualify for a home loan, you must show the lender enough cash on hand for the down payment and closing costs.  In addition, you usually have to have enough for several months’ mortgage.
• One way to reduce closing costs is to get a no-point loan; you may have to pay a higher interest rate, but it saves you money up front.
• Another way is to purchase a home late in the month - less interest will be owed to the lender.
• Lenders won’t allow a seller to credit money towards a buyer’s cash down payment, but will allow them to cover some, or all, of the non-recurring closing costs.
• One way to convince a seller to cover non-recurring closing costs is to increase the purchase price; the catch, however, is that the lender will have to appraise the property at the higher price or the deal might fall apart. 
• Lenders’ policies vary: some permit credit for all non-recurring closing costs; others limit it to 3.6% of the purchase price.
• Some portfolio lenders, however, are more lenient: they’ll pay all non-recurring closing costs in exchange for a higher interest rate.
• In a slow market, a seller or builder will usually pay at least some of the non-recurring closing costs.