The down payment is not the only cost you should be paying attention to and preparing for when buying a home. There are other fees and costs that you need to settle before you finally call that house yours. One of these is the closing costs.
This is why it is important that you assess your finances first before starting the home buying process. You need to ensure that you have sufficient money and savings to allow you to efficiently go through the entire purchase process without any problems and difficulties.
What are closing costs?
These are fees from the lender and other third party companies in the home purchase transaction that you are required to pay at the closing of the transaction. Generally, most closing fees are 2 percent to 5 percent of the purchase price, depending on the lender or third party company requiring the fees.
Closing costs can be recurring or non-recurring. Recurring closing costs are due every month that will start at the closing of the purchase transaction. Non-recurring costs are one-time fees that you will have to pay at the closing. These costs are often allocated to the processing of your mortgage loan and the closing of the purchase transaction.
Recurring closing costs when buying a home in Myrtle Beach
The primary recurring closing costs that you need to pay include fire insurance premiums, home owners’ association dues, property taxes, homeowners’ insurance and prepaid loan interest.
Property taxes are shouldered by the owner of the house. Thus, until you sign the purchase contract, these are the responsibilities of the home’s seller. After you sign the contract, you will become liable to pay for the property taxes which will start from the next billing cycle following the date of purchase. Property taxes are paid by the year and are prorated at closing. The buyer of the property will reimburse the owner for the taxes that have already been paid.
Generally, homebuyers are required to pay for the total annual premium of the homeowners’ insurance at the closing. In addition to this, however, you may be required to pay an additional 2-3 months worth of monthly homeowners’ insurance payments. Prepaid loan interest, on the other hand, is paid every month starting from the closing of the purchase transaction.
Nonrecurring closing costs that you need to pay when buying a home
Nonrecurring costs at the closing of a home purchase transaction generally include all lender fees. These fees differ depending on the lender you are working with. It helps if you spend time discussing these fees with the lenders you are considering before buying a home in Myrtle Beach. This way, you can negotiate for the best deal which you and the lender will both benefit from.
Here are some fees that are included in the nonrecurring costs that you need to pay your lender at the closing.
- Origination fee, which is allocated in the processing of your loan.
- The wire transfer fee, which is required when your lender wires the money you borrowed to pay for the house you are buying.
- Document prep fee for the preparation of your loan documents.
- Credit report fee that is used by the lender to get a copy of your credit report.
- Appraisal fee which is what the lender will use to pay for a real estate agent to estimate the market value of the house you are buying.
- Underwriting fee for evaluating and verifying your application.
- Survey fee which is what the lender uses to verify the property lines of the house that you are buying.
There are other fees that you may have to pay depending on the lender you are working with. Note that you can still negotiate these fees with the lender. On the other hand, you need to allocate time to speak and discuss possible options with the lender. Also, keep in mind that the lender should also benefit from the negotiations that you are proposing.
To ensure successful negotiations to decrease your closing costs, be sure to work with a trained and experienced professional. Full Potential Real Estate, LLC will help you negotiate closing costs and ensure a smooth transaction when buying a home. Call them now to inquire about their services.
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