More about closing costs

In one of my previous article, we defined what closing costs are and we discussed its two broad categories, the recurring closing costs and the non-recurring costs. Closing costs are costs typically paid at the closing of a buying or refinancing transaction, incurred by either the buyer or the seller. In this new article, we will be learning more about closing costs such as what consist closing costs.

I have included some items in this article which do not traditionally appear on the lenders’ Good Faith Estimate and I must say that it was a little challenging to find this information and came up with this article, because commonly, lenders are not allowed to show all of these items. But for your benefit, I did it. To start, let’s define mortgage closing costs. In cool springs Real Estate, closing costs of a buying or refinancing a mortgage were defined as the fees charged for services that performed during the step by step process of buying or refinancing transaction and the services performed to close the loan.

Also in the previous article all about closing costs, we had the chance to discuss what lenders referred to as the good faith estimate.  Lenders are required by law to disclose to you, in writing, what the estimated mortgage closing costs will be and that is what good faith estimate is. Lenders come up with it at a time that you apply for a loan.

An average closing costs range from $2,500 to $5,000. This is about 6% of a borrower’s loan. For borrowers, they see this amount considerably big when paid upfront at closing and they always wonder where exactly the money goes.

Common misconception about the closing costs in mortgage according to the Nashville Real Estate business experts

When paid the closing costs, as I said earlier borrowers and lenders always wonder to where the money goes and what they always think is that the closing costs go to the lenders. This is not actually true. In reality, many of the costs are related to services performed by others. Some of the services include from inspections and appraisals to title insurance, taxes and more.

That is the reason why as a borrower and a buyer, you need to check your lender fees and closing costs very carefully. If it happens that a lender boasts incredibly low rates, it's possible that they will try to make up the difference in exorbitant lender fees