Five Facts About Home Loan Closing Costs
FHA Home Loan Closing Costs Will Vary Depending on the Transaction
The closing costs you are charged will vary for a variety of reasons including the customary pricing in that particular market or from that specific financial institution.
Closing costs may also vary depending on the choices you make about the home loan. A longer or shorter loan term may result in different required costs; there is also the fact that some properties may require hazard insurance while others do not.
That may require a flood zone determination or some other procedure that isn’t always part of the home loan transaction.
FHA Home Loan Closing Costs May Be Paid In Part by the Seller
The seller of the home can contribute up to six percent of the sale price of the home toward your closing expenses.
If you decide to look for a seller who will do this, you’ve given yourself an extra bit of criteria the sale property must meet for you to make an offer, but the trade-off is that you pay less out-of-pocket for your mortgage.
Buyer beware, though; there is a six percent cap on these contributions. Any amount the seller or any other interested party contributes to the closing costs above that six percent results in a dollar-for-dollar reduction in the loan amount.
Some FHA Home Loan Closing Costs May be Negotiable
Many people hate the negotiation process, but if you are willing to haggle with your loan officer you may find that you can get a lower dollar amount in areas such as the lender’s fee or other pricing the financial institution has control over.
Not All FHA Loan Closing Costs Are Paid to the Lender
When it comes to haggling, as suggested above, borrowers should know there are some closing costs the lender simply has no control over.
Appraisal fees, credit report fees, survey or title fees may all be set and collected by third parties that are not associated with your lender.
Choose Your Closing Costs Carefully
It’s easy to assume from the headline above that a borrower actually has a choice when it comes to certain closing costs. In one particular case this is true-the lender may offer discount points, which borrowers may purchase in order to reduce the interest rate on the home loan.
But a lower interest rate pays off when you stay in the home a long time; if you plan to sell the home sooner instead of later, discount points may not make as much sense as they do for the person who wants to pay off the home loan and see the mortgage through its’ full term.
Closing costs like discount points are optional-know the advantages and disadvantages to purchasing these points before you commit.
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