Demystifying Closing Costs for First Time Buyers

Mar 24, 2021 | Mortgage

Buying your first home is a big milestone. It can also be overwhelming to try to learn lending industry terms, and to try to educate yourself on the commitment you’re making to ensure you are in the driver’s seat.

Most first-time home buyers are aware of the cost of their mortgage and their real estate agent’s fees. But once you get to the end of the homebuying process, there are further expenses known as “closing costs”  that you’ll want to be aware of. These are a small percentage of your loan value and vary depending on what state you’re buying in.

This week we’ve put together a list of all the closing costs every first-time buyer will want to be aware of. Keep in mind that if you are applying for a VA or FHA loan, these costs will vary, and the buyer may cover some costs, but you can expect conventional loans will include the following:

Lender Fees

These are the fees your mortgage lender will charge to process your loan. They may include a Credit Report Fee, Origination Fee, Application Fee and also Lawyer fees as most states require a lawyer to be present during closing.  These fees can sometimes be negotiated or waived. The higher your loan value, the more leverage you will have. It’s important that you understand exactly where your money is going so make sure to keep the line of communication open with your lender, and make sure you ask questions if you need clarity. Homeownership is a huge investment and your lender should be there to serve you.

Property Fees

You will have an escrow account once you sign a purchase agreement and pay earnest money or a small good faith deposit ensuring the sale won’t fall through. This means no money exchanges hands while preparing your mortgage until the day of closing. Escrow fees are paid to the title company and often include your PMI or contributing portions of your yearly property taxes ahead of time. HOA fees will also be paid through escrow account as well. If there is no earnest money paid up front, you will still be responsible for property fees like your title, appraisal and home inspection fees.

Reach out to a Lender

Buying your first home is such an exciting time. But there are a lot of fees to keep track of. Your lender at EPM can help you get clear on these closing costs and get you on your way to feeling confident about your closing. If you ever find yourself with any questions about mortgages or refinancing, don’t hesitate to reach out to us by phone at 877-255-3554 (toll-free), find a local Mortgage Loan Originator or visit our contact form here.