In the process of buying a house, it is important that a homeowner sets aside money for closing costs. Usually, these costs amount to about three percent of the total cost of the house. A home buyer should ask a mortgage broker to explain the closing costs likely to be encountered. Usually, the seller will provide information regarding these costs during the initial process of buying the house. However, the buyer should not hesitate to ask for clarification where he or she does not fully understand. The goal is to get a clear understanding of how the closing costs will affect the buyer’s budget so as to make necessary adjustments and avoid last minute inconveniences. Some of the closing costs that you can expect as a homebuyer include:
Legal fees will vary depending on various factors, but on average, they will cost about $700 to $1200. You should set apart about $200 to $400 for such disbursements as mortgage registration, the completion of a tax certificate, and the title search of the property you intend to acquire. The charges may also include postage, faxing and photocopying fees.
Property tax adjustment
Part of the process of closing will usually involve reimbursing previous owners for prepaid taxes, as they will have been paying property taxes to the city. Set aside some money to cover these costs.
Interest adjustment date
Your lender will set an interest adjustment date and probably require you to pay interest pending the arrival of the date. Set apart some money to settle these costs. Usually, the interest is a month’s interest at the rate of your mortgage.
To minimize the amount spent on closing costs, it is advisable to seek advice on rates in the market. Your bank or mortgage broker are two sources who can assist you with this. Seeking this information is beneficial as it could end up saving you a lot of money.