|What about Closing Costs?
Overall home financing costs to consider include:
- Down Payment
- Mortgage Insurance
- Loan Payment Reserves
- Closing Costs
Generally, closing costs (including prepaids) amount to between
3% and 7% of the home purchase price. The percentage depends on
the region of the country in which you buy, the kind of mortgage
you get and the time of the month you close.
Prepaids must be collected at closing to cover the future month's
taxes, interest and insurance. But the good news is most loan programs
allow you to finance your other closing costs in the form of a slightly
higher interest rate, reducing the amount of cash you will need
at closing. Other loan programs allow some or all of the closing
costs to be paid by the home seller or to come from other sources.
My Mortgage specialist
can provide information on average closing-cost percentages for
specific areas and loan programs. And, shortly after you apply for
a home mortgage, you will be sent a good faith estimate which provides
details on the approximate costs you will be required to pay at
or before closing. While it is only an estimate, it can help you
budget for your closing.
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