What Are Closing Costs & How Do They Work?

man pays closing costs for home loan

Are you planning on buying a new home? Or refinancing your current home? Did you know you can save on closing costs?

Are you wondering what is included in closing costs and why they exist? You’re not alone, many homeowners ask the same question!

While they may seem like just another fee, closing costs can help you in the long run. These fees, referred to as closing costs, include lender and title fees accrued through the home-buying process that are paid during closing, or when the property transfers from a seller to a buyer. For example, the title insurance cost protects you if the previous owners didn’t pay their property taxes. Plus, there are ways you can reduce the amount you may have to pay in closing costs.

Discover more about saving on closing costs!

What Are Closing Costs?

Closing costs include a variety of fees added to the price of the home. These fees could include attorney fees, title insurance, taxes and others. Some of these fees may be negotiable, so you may be able to work with the seller to cover some of your home mortgage closing costs. You can also check with your lender to see if they are offering assistance with closing costs.

Who Pays Closing Costs?

The buyer usually is responsible for the majority of the closing costs, but, as noted above, it could be negotiated during the selling process to where the seller pays a portion of the costs. Even if your seller isn’t willing to negotiate closing costs, there are still ways to lessen the amount you pay. One way to reduce your costs would be by looking for a home mortgage lender who is offering closing cost assistance.

How Much Will I Pay?

Closing costs vary by region. One way to get an idea about how much you’d pay would be to apply for a mortgage loan.

Even if you haven’t found your dream home yet, you can still apply for a mortgage loan. That way, when you find your perfect home, you can call your loan officer to complete your application. After you apply for your loan, you’ll receive an estimate for the amount of your closing costs, so you’ll have an idea of how much to pay at closing.

Keep in mind these fees may change. You’ll learn the final closing costs amount before your closing date when your personal loan officer contacts you to discuss your documents. Your loan officer will also give you a detailed breakdown of the closing fees so you’ll feel prepared at closing. At this critical time, your personal loan officer will also answer any questions you may have about the process.

Minster Bank aims to make the entire process a more comfortable experience for you – whether you’re a first-time homebuyer or refinancing your current home – so we’ve put together a list of unfamiliar terms you may encounter during the loan process and additional resources you can access at any time.

Get answers to what happens at the loan closing and more FAQs

Get Ready to Enjoy Your New Home

While they may seem superfluous when already making such a large purchase, closing costs are necessary for the buying process. A lot goes into purchasing a home, and Minster Bank takes care of even the smallest detail, so you can relax and enjoy your new home!

Contact Minster Bank to start saving money on your dream home.

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