Moving Soon? Closing Costs and What Might You Need To Know
When you’re in the process of purchasing a home and relocating, costs can add up fast. You likely already know that you need to set aside some money for closing costs, but it can be tough to figure out precisely what you’re paying for. Here, we’ll break down the most common closing costs to help you understand why it’s so essential to sock that money away until it’s time to close.
In most cases, the entire first year of homeowners insurance is paid at the sale’s closing. While the price tag can feel daunting, taking care of a year of insurance at once means that you’ll have one less monthly bill to pay as you enjoy your first year in your new home. The cost of your policy will determine how much you’ll need to pay.
Private Mortgage Insurance
If you (like many people) choose to put less than 20% down on your home, you’ll likely need private mortgage insurance (commonly referred to as PMI). You may have the option of whether you’d like to include your yearly PMI payment as a part of your closing costs or if you’d prefer to have PMI included in your monthly mortgage payments.
You may be required to have and pay for a credit check as a part of the closing process. Talk with your mortgage lender beforehand about whether you’ll need to pay for your credit check as a part of your closing cost.
In most cases, you’ll pay six months of property taxes at the closing of the sale of your new home. After your sale closes, you may have the property reassessed — meaning you’ll need to shell out some additional cash (or you could find that you get a refund from your original payment). Be sure to set some money aside if your initial price doesn’t cover the total tax value of your property.
Loan Origination Fees
Your mortgage lender takes time to figure out the terms of your loan. Unfortunately, the cost of this process isn’t included in your mortgage. Loan origination fees cover the cost of the time and labor required to develop the terms of your mortgage.
The laws vary by state, but in some situations, you may be required to work with an attorney as you go through the process of buying a home. Talk with your mortgage lender to learn whether you’ll be required to cover attorney fees as a part of your closing process.
Preparing To Move? Don’t Try To Go It Alone.
Whether you’re just starting to hunt for a new home or you’re in the midst of closing, every step of the moving process can bring stress. We’re here to make your move easier. Contact us for a price quote and learn more about how we can make your move as simple as possible.