Friday, September 18, 2020 / by Vanessa Saunders
By Vanessa Saunders, MBA, MIMC , Broker Owner, Global Property Systems Real Estate.
According to a recent survey conducted by ClosingCorp, over half of all home buyers are surprised by the closing costs required to obtain their mortgage.
After surveying 1,000 first-time and repeat home buyers, the results revealed that 17% of home buyers were surprised that closing costs were required at all, while another 35% were stunned by how much higher the fees were than expected. “Home buyers reported being most surprised by mortgage insurance, followed by bank fees and points, taxes, title insurance and appraisal fees.”
According to Barry Goldenberg, Senior Loan Originator for Luxury Mortgage:
"Closing costs are fees and expenses paid by the buyer to the lender or third-party servicers such as title companies and attorneys who are part of the process of closing on a home. Closing costs can be rolled in with the mortgage loan, or paid up front. These costs can be from 2% to 5% of a loan."
By law, a home buyer will receive a loan estimate from their lender 3 days after submitting their loan application and they should receive a closing disclosure 3 days before the scheduled closing on their home. The closing disclosure includes final details about the loan and the closing costs.
Bankrate.com recently gathered closing cost data from lenders in every state and Washington, D.C. to be able to share the average costs in each state. The map above was created using the closing costs on a $200,000 mortgage with a 20% down payment. New York and Hawaii were the only states coming it above an average of $2500 to $2750.
Goldenberg concludes, "Buyers should be made aware of all closing costs by their lender before the closing day arrives. If your lender doesn't disclose these costs, demand to know what they will be. Not having enough to pay closing costs can cause serious headaches at the closing table."
"Speak with your lender and agent early and often to determine how much you’ll be responsible for at closing. Finding out that you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to."
For answers to your questions about home financing, contact Barry Goldenberg of Luxury Mortgage.