At closing, you settle all of the financial details associated with obtaining a new mortgage:
f you are purchasing a property, you’ll receive the keys to your new home
If you are refinancing, you will pay off your current mortgage and obtain a new one
Closing may take place at the title company, the office of a real estate agent, your lender’s office or, if you are refinancing, in your own home.
What Are Closing Costs?
Closing costs are fees paid at closing (settlement). By law, closing costs must be listed on a document called the Closing Disclosure.
At closing, the borrower has the opportunity to carefully review the Closing Disclosure to confirm all of the costs and details of the loan.
Specifically, what are closing costs? Here are some examples. (Depending upon your loan type and other factors, some of these closing costs will not apply and/or there may be additional costs not listed here.)
Typically, these costs must be paid for with a cashier’s check. The borrower may also need to bring additional cash to close to cover the down payment.
How Much Are Closing Costs?
The answer to the question, “How much are closing costs?" will depend on where you live, how much down payment you are making and whether you are buying a home or refinancing.
Typically, closing costs range from 2% to 6% of the purchase price or appraised value of your home.
Who Pays Closing Costs?
When you are purchasing a home, you are responsible for closing costs, but the actual answer to “Who pays closing costs?" will depend on the sales agreement. The buyer may agree to pay a higher sales price if the seller pays mortgage points, for example.
What Are Mortgage Points?
Points are interest charges that you pay up front when you get a mortgage. One point is equal to 1.00% of the total loan amount.
Points are also called discount points or loan origination fees. You can pay points to get a lower interest rate; also paying points can lower your monthly mortgage payment.
Prepare for Closing on a House
To prepare for closing on a house, make sure you have the items you’ll need to bring. Here are some examples:
The borrower and any co-borrowers attend closing in person unless a power of attorney (POA) has been obtained in advance. Other people at the closing table may include:
What Documents Do You Sign at Closing?
Here are some of the documents signed at closing. Depending on your state, county or municipality, these documents may have different names or take different forms:
The closing agent makes sure all necessary documents are signed and verified, and the money from the sale is properly distributed in the case of a purchase loan. After closing, the closing agent will take care of recording the deed in the county where the property is located.
Make sure you read and understand all of the documents you are signing at closing, as well as the closing costs. At closing, you will have the opportunity to ask questions and feel comfortable about the transaction.
Buying a home or refinancing a mortgage is an important financial decision. If you are thinking about buying or refinancing a home, speak with a licensed loan officer at Right Key Mortgage to learn more about the options available to you today.