How Much Are Closing Costs
Buying a home can be expensive. You are probably familiar with some of the costs associated with buying a new house, including a down payment. But there is another type of cost associated with homeownership called the closing cost. The closing cost of a home is the fee you pay to the lender to get loan services. Closing costs are part of most home sales, but like mortgages, the amount homeowners pay in closing fees varies. A loan officer Las Vegas can explain what closing costs are and how you can reduce your payments.
Understanding Closing Costs
Closing costs are fees that you pay to your lender for handling your loan. Closing costs are used to cover the home’s title, appraisal, title searches, and more. Closing costs are mostly determined by your location and the type of loan that you take out. Your closing costs are determined when you go to a closing meeting for your home loan. During the meeting, your lender reviews and accepts your down payment and any other funds that go towards the home’s closing costs.
Pricing for Closing Costs
Closing costs vary in price. Most range from three percent to six percent of the home’s value. If you have a mortgage of $200,000, for instance, your closing costs will be in the approximate range of $6,000 to $12,000. Although the lender will accept your down payment when you meet to discuss closing costs, the down payment is not actually considered part of the closing costs.
Negotiating Closing Costs
The home buyer and seller are both responsible for portions of the closing cost, but the buyer pays for most of the closing fees. While the down payment is a pre-determined number based on the lender’s criteria, you might be able to negotiate with the seller on the price of the closing costs. This process is called seller concessions. The seller may agree to negotiate the closing costs if you have trouble paying for the total amount requested.
While a seller can contribute to closing costs, the total amount that the seller can put towards the closing costs is limited. Sellers may contribute a certain amount towards the closing costs based on the value of your mortgage. Maximum amounts vary by loan: 
- Conventional loan: 3%
- FHA loan: 6%
- USDA loan: 6%
- VA loan: 4%
If your conventional loan value is $200,000, for example, the seller can only contribute a maximum amount of $6,000 to your closing costs if you have a 3 percent limit or $12,000 if you have a 6 percent limit. If your total closing costs are less than 3 percent total of your loan amount, the seller can contribute 100 percent of the closing cost value, which is a measure designed to mitigate fraud. If your loan is equal to $2,500, for instance, the seller can offer that amount for the closing costs, but no more.
What do Closing Costs Include?
Unlike other payments on your home, the closing cost may fluctuate from one person to the next. The closing cost is determined based on several factors such as your geographic location, the type of loan that you select, and the lender. The expenses associated with your closing costs are outlined in the Closing Disclosure, which lists all the fees you must pay. The closing cost will include the application fee and a handful of other expenses, including attorney fee, appraisal fee, credit reporting fees, and courier fees, which the lender may charge for transporting physical mortgage Las Vegas documents. Prepaid costs may also be included in the closing fees. Most lenders require prepaid costs, but you may be able to negotiate on the final price. Most lenders request that borrowers create an impound or escrow account when they take out mortgages Las Vegas. At a minimum, buyers must typically pay for at least one year’s worth of homeowners insurance and two months’ worth of insurance premium payments for their closing costs. Buyers may also need to pay anywhere from two to six months’ worth of property taxes, depending on state rules. You may be exempt from these requirements in certain situations, such as if your down payment is 20 percent or more. (Read more on what is a home downpayment here.)
Getting a Better Deal
As with mortgages Las Vegas, experts recommend shopping around to look for the best deal on your homeowner’s insurance, which in turn can lower your closing costs. Be sure to consider the different components associated with your homeowner’s insurance, such as the deductible and coverage amounts. Try to compare rates for at least three different insurance plans before settling on one.
The closing costs on your home can vary widely based on numerous factors. To ensure you have the best deal on a closing fee, contact an experienced loan officer Las Vegas for advice. A loan officer can work with you to reduce or eliminate closing costs to make you a happy homeowner.
