Who Pays Closing Costs Explained
Once you have solidified an offer on a home, The Moreira Team will work with you to figure out your closing costs.
Below is a quick video on closing final costs which will help answer your questions and shed light on this very important piece of the mortgage process.
Why do You Need A Down Payment
The minimum down payment you need is 3.5% and this is specific to a Government loan type called a FHA loan. The average down payment is usually 5%. The goal here is to put down as much as you can without effecting your debt to income ratio or your ability to make your monthly mortgage payments.
Read more about Down Payments
Why the lender requires a Home Appraisal before your loan gets approved
The lender will schedule a appointment with the seller’s agent to have a qualified lender approved home appraiser determine the value of the home you want to purchase. As long as the appraiser deems that the value of the home matches up with your offer the mortgage loan will move forward to the underwriter stage for approval. If issues come up where the value is lower than the sales price you will need to decide if you want to negotiate with the seller to lower the sales price. Your realtor will be able to you assist you if this comes up.
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Why a home inspection is a must
Hidden major defects in a home can add up to thousands of dollars in repairs. If you are investing $250,000 in a home why not invest $300-$500 in a professional home inspection to uncover any serious issues that could be overlooked like a cracked foundation, mold issues, termites, leaky roof. It can go on and on. If you get an inspection the home inspector will photograph any structural, electrical, plumbing & heating issues that could impact the cost of your home. Catch it early and you avoid getting into a problem house and perhaps you loss $500 and avoid a major financial problem. If the issues are manageable you could negotiate a conditional offer with the seller that could save you thousands.
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What are the closing fees
Expect to set aside 2% to 4% of the value of the mortgage to cover the closing costs. Your realtor in most cases will negotiate all or at least a portion of your closings costs to be covered by the seller. If your refinancing, your closing final costs can be financed into the new loan so you can eliminate or significantly reduce any out of pocket expense you might incur. Be sure to check with your mortgage advisor on your closing cost options so you don’t run into any surprises when you are ready to close.
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What to get ready for on moving day
Your mortgage is approved and your just weeks from your moving day. Here is what you need to get prepared for prior to moving day.
Read more about Moving Day Tips
Why do I need Home Insurance
Your lender requires you the homeowner to properly insure your home against fire, theft and damages for the amount of your mortgage and valuables. This insures that the lender is covered should your home be a total loss or sustain serious damage. It also cover you so that you can replace valuables and rebuild should a serious issue happen to your home.
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Why Should you pay your mortgage off sooner
These days lenders have lots of options to make accelerated payments on your mortgage without penalties. The goal here is to get to home ownership sooner so you can enjoy your life without the constraints of mortgage payments.
A simple change to your payment frequency from monthly to bi-weekly can save you a full mortgage payment a year that can shave a few years off your mortgage.
Read more about Paying Off Your Loan Sooner