When closing on a house, there are some associated charges and fees called closing costs. These are fees that both buyers and sellers owe to any service providers facilitating the operation.
As a first-time homebuyer, you’ll owe fees associated with both taking out a loan as well as the cost of owning a home. Below, we’ve provided a detailed list of the most common closing costs.
Closing Costs for Buyers
Each buyer will have their own amount of closing costs to pay to the lender and government, depending on various factors.
Some days prior to closing on the home, you’ll receive a closing disclosure from your lender, which will detail all the closing costs you’ll owe and how much each is.
Here is a rundown of the most common costs you’ll need to pay as a first-time homebuyer:
Working with real estate agents, home inspectors, attorneys, and other professionals is very smart when purchasing a loan as a first-time homebuyer. However, there are some fees you’ll owe them for their services. These include:
- Appraisal Fees: You’ll owe $600 – $900 for having the value of a home evaluated.
- Credit Report Fee: This is the fee associated with the lender looking up your credit report.
- Mortgage Insurance: The cost varies based on the lender.
Lender fees are unique to each lender. Only some make first-time homebuyers pay for discount points.
The typical lender fees are:
- Origination Fee: This is usually about 1% to compensate your lender for creating the loan.
- Application Fee: This is generally about $300 owed for processing an application.
- Discount Points: This is an optional fee of 1% for every 0.25 reduction in rate.
- Prepaid Interest: This is a prorated daily charge for the first month’s mortgage interest.
- Property taxes: The taxes you’ll have to pay are dependent on the estimated value of your property and the laws of your local government.
- Homeowner’s insurance: This depends on the value of the house you’re purchasing.
- Homeowners association fees: These fees are only applicable if you’re buying a place within a homeowners’ association.
- Escrow account fees: The purpose of these fees is to set up an account through which .your lender can pay taxes and insurance on your behalf.
We Work with First Time Homebuyers
If you’re purchasing a home for the first time, the process does not have to be difficult at all. Discussing and closing on a mortgage can be extremely quick and easy when you have the right team of experts on your side. Reach out and discuss your first-time homebuyer loan needs with us today.