Buying a house can be a very expensive purchase, and this is not only because homes are so expensive. When you buy a house and get a loan to do so, you will incur expenses, which are called closing costs. Paying for closing costs is not something you can avoid, but it is a good idea to understand what types of closing costs you will have and what they are for before you begin looking for a house to buy. Here are four common types of closing costs you can expect to incur when you are buying a house.
Loan origination fees
If you are getting a loan to make your purchase, you can expect to pay around 1% of the loan amount for loan origination fees. These fees are designed to cover the costs the lender incurs for processing your application and loan. These fees include every step the lender must complete from the time they receive your application to the time you close on your loan.
A second type of closing cost you can expect to pay is for title work. Every house has a title, and one of the main purposes of title work is to make sure the seller has the right to sell the house to you. When title work is completed, a title company will research a home's title to determine who owns the house and if there are any liens on the house. In addition, the title company will provide insurance coverage for the title, and this coverage is designed to protect you, the buyer, of the house. If the title company missed something when performing the title work that negatively affects you later, they will cover the costs to fix the problem.
The other common fee you will have when purchasing a house is for inspections. Inspection fees can add up quickly, especially if you need a lot of them, but getting these inspections is vital. There may be some inspections you are required to get, such as a sewer inspection. There may be others that are optional, such as a home inspection. In any case, you will probably be responsible for the fees associated with all the inspections that you get when buying a house.
Now that you understand some of the main types of fees you will have to pay for in your closing costs, you might be ready to start shopping for a home. If so, schedule a visit with an agent to help you locate homes that suit your needs. Click here to search for real estate.Share