U N D E R S T A N D I N GF H A C L O S I N G C O S T S

B L O G . F H A . C O

What are Closing Costs?Closing costs are fees that are incurredduring the whole process of the loanapplication.

Types of Closing Costs

1. Charges for establishing andtransferring ownership2. Amounts paid to state and localgovernments3. Mortgage-related costs

Types of Closing Costs1. Charges for establishing andtransferring ownership

Title insuranceTitle search Legal fees

Types of Closing Costs2. Amounts paid to state and localgovernments

Prepaid Property taxRecordation feesCity, county, and state transfertaxes

Types of Closing Costs3. Mortgage-related costs

Loan origination feesDiscount pointsAppraisal feeSurvey feeApplication feeHomeowner's & Hazard InsuranceMortgage Insurance

Can FHA closing costsbe financed?

YES! For FHA loans, you are allowed toroll the closing costs into your mortgagebalance.

Even with lenient FHA loan guidelines,borrowers cannot include the closingcosts . They are considered separatefrom the minimum down paymentrequirement.

HOW TO SAVE ON CLOSING COSTS

City and state taxes vary greatly in different partsof the country. This has a huge impact on theclosing costs. Borrowers in some areas only payaround 2-3% closing costs, while those whowish to purchase homes in areas that areconsidered high-tax can pay up to 5-6% forclosing costs alone.

1. Know your locale

Ask for good faith estimates. Ideally, it is good toget at least 5 good faith estimates from differentlenders. This should give you enough options.

2. Shop around

HOW TO SAVE ON CLOSING COSTS

HOW TO SAVE ON CLOSING COSTS

Once you have a couple of the estimates,examine the items on the forms and watch forfees that one lender is not listing or is muchlower than others. Some lenders purposelyuse a very low figure to make the overallestimate look low.

3. Review closing cost forms

HOW TO SAVE ON CLOSING COSTS

After looking at the details of what’s included in the closing costs, you can save on some ofthem by negotiating with the seller. Based on market conditions, both parties can come upwith an agreement to split the closing costs.

4. Negotiate

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INFORMATION ORIGINALLY PUBLISHED MAY/8/2016

INFORMATION PROVIDED BY:

JUSTIN MCHOOD

He is Americas Mortgage Commentatorand has been providing Mortgagecommentary for over 10 years.

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