Interested in Zero interest?
If you are looking to buy a home, right now is the best time to start searching. Because of the low interest in purchasing homes, many lenders are willing to lower the amount you initially pay out of pocket. There are many different ways you can reduce the amount of closing cost you will pay, but first yo
u must have a through understanding of what closing costs, interest rates, and your initial out of pocket expense will be when you are looking into to buying a house.
What Sellers Are Looking For
When someone is selling a house, they want to get as much for it as possible. Because of this, they will list their house in the median price range for the area. In many cases, this may leave some negotiation room when it comes to pricing and closing costs.
If a seller is motivated to sell their house, they may be willing to cover the closing costs in exchange for an offer that is close to what they have their home listed for.
Common Closing Costs
The most common types of closing costs revolve around the lender’s risk.
Loan Origination Fee – a percentage of the loan amount that is charged by the lender for processing and completing the transaction.
Credit Fee – charge caused by the lender for running yours and your spouse’s credit score.
Points – Essentially, this is a method of purchasing a lower interest rate. This is done by paying a certain percentage of the loan value to the lender up front.
PMI – This fee is associated with the risk the lender faces. It purchases insurance that protects the lender if something should happen to the property. The technical term for this charge is “private mortgage insurance. Typically this fee is associated with accounts where the down payment is less than 20% of the final purchase price of the house.
Prorated Interest – If the loan on the house is closed on in the middle of the month, the lender collects intererest for the remaining portion of the month.
Annual Homeowners Insurance – This insurance is purcahsed to protect the lender if something happens to the property before the loan is paid off.
Title Fee and Insurance – This is a fee that is charged by the title company to search for the title to the house and provide insurance that prevents the lender against any lean that is on the deed before purchase.
Appraisal Fee – This is typically charged by the lender to have the property looked at by an indepenant appraiser. This helps the lender ensure that the amount of the loan is not more than the value of the property.
Prorated Property Taxes – Property taxes are added to the mortgage by the lender on a monthly basis as part of the mortgage payment. This amount is for the partial month that the house is closing in.
Ensuring You Can Get A Loan
If you are interested in buying a house in the near future, and you plan to finance through a bank, you can increase your chances of getting a loan through them by opening a savings account or checking account with the branch you plan to finance through.
Simply having an account can improve your chances of getting a loan and decrease your interest rates.