Beginning Edina homebuyers need to understand one essential aspect in the process of owning a house and sales contract, which is 'closing costs'.Some are not aware that closing costs are typically set at 15 percent of the sales price, and most lenders would require for them to be paid upfront. Achieving your goal of efficiently projecting your available funds and discussing your preferences in the arrangement of final price means being more prudent to identify them earlier, even if some lenders can roll them into the loan package.
Remember that the lender’s primary basis in the amount he presented to you is the sales price paid by the buyer and not necessarily the net price (or the sales price minus the closing costs). There are various ways in which closing costs are allocated and this may need the help of your realtor and lender if only to come up with the most agreeable plan for you to stay within your budget limit.
Having knowledge about the responsibilities of a buyer is the first prerequisite to understanding what closing costs are. As explained by Barron, the author of the book 'Smart Consumer's Guide to Home Buying', homebuyers must know that custom dictates allocation of closing costs and designates buyer and seller responsibilities, and not the law, as many believes it to be.
It is the buyer who typically settles all the fees and the loan’s the discount points. The lender, on the other hand, adds all these at the end of the contract (but may vary significantly according to the financial institution concerned). Bankers typically assign this fee as part of your contract or may be waived for important customers, yet it is best that you have an exact idea what the estimated amount will be.
The buyer is also responsible in paying the premium of the homeowner's title insurance policy and has to ensure that this be settled before the purchasing begins. Most will agree that it is beneficial to have some extra cash in your hands to pay for the premium and to avoid getting it rolled into the loan. You also need to consider that premium cost may depend upon the insurance company. Before signing the contract, it may be wise to do a little research particularly on the insurance policy rates of homeowners or try to scout around for other possible choices. These costs constitute the seller's obligations.
Sales Commissions - refers to the fees allocated to the agent of both the buyer and the seller. However, these may depend upon the real estate agent you chose to work with.
Inspection Costs - pertains to the expense of having various inspections and those that are required for homes prior to purchase.
Title Insurance - there is one misconception about title insurance since many first time homebuyers think that they will need to take care of any costs associated with the title company except it. However, title insurance costs are included in the closing cost and thus becomes the seller's responsibility.
When you know what closing costs are, you can have a better idea as to what your home's final price will be during the signing. As a matter of fact, if early on the financing process you have done so, the lender may give you necessary information like the fees you will have to pay and discount points among others.
About the Author: Alexandria P. Anderson is a Lake Minnetonka real estate agent that helps people to find and purchase Lake Minnetonka homes and properties for sale in the Twin Cities of Minnesota.
Remember that the lender’s primary basis in the amount he presented to you is the sales price paid by the buyer and not necessarily the net price (or the sales price minus the closing costs). There are various ways in which closing costs are allocated and this may need the help of your realtor and lender if only to come up with the most agreeable plan for you to stay within your budget limit.
Having knowledge about the responsibilities of a buyer is the first prerequisite to understanding what closing costs are. As explained by Barron, the author of the book 'Smart Consumer's Guide to Home Buying', homebuyers must know that custom dictates allocation of closing costs and designates buyer and seller responsibilities, and not the law, as many believes it to be.
It is the buyer who typically settles all the fees and the loan’s the discount points. The lender, on the other hand, adds all these at the end of the contract (but may vary significantly according to the financial institution concerned). Bankers typically assign this fee as part of your contract or may be waived for important customers, yet it is best that you have an exact idea what the estimated amount will be.
The buyer is also responsible in paying the premium of the homeowner's title insurance policy and has to ensure that this be settled before the purchasing begins. Most will agree that it is beneficial to have some extra cash in your hands to pay for the premium and to avoid getting it rolled into the loan. You also need to consider that premium cost may depend upon the insurance company. Before signing the contract, it may be wise to do a little research particularly on the insurance policy rates of homeowners or try to scout around for other possible choices. These costs constitute the seller's obligations.
Sales Commissions - refers to the fees allocated to the agent of both the buyer and the seller. However, these may depend upon the real estate agent you chose to work with.
Inspection Costs - pertains to the expense of having various inspections and those that are required for homes prior to purchase.
Title Insurance - there is one misconception about title insurance since many first time homebuyers think that they will need to take care of any costs associated with the title company except it. However, title insurance costs are included in the closing cost and thus becomes the seller's responsibility.
When you know what closing costs are, you can have a better idea as to what your home's final price will be during the signing. As a matter of fact, if early on the financing process you have done so, the lender may give you necessary information like the fees you will have to pay and discount points among others.
About the Author: Alexandria P. Anderson is a Lake Minnetonka real estate agent that helps people to find and purchase Lake Minnetonka homes and properties for sale in the Twin Cities of Minnesota.
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