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Understanding the Asking Price
by Joe Taylor Jr.
CMR Columnist
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Enjoying the predictable weather in California comes at a cost: totally unpredictable closing costs. Whether you choose a fixed rate or an interest-only mortgage affects your closing costs. Some lenders may roll closing costs into a higher home mortgage loan rate. Other mortgage underwriters might offer you a superb deal--if you part with some extra cash up front.
Start with an Estimate
As with any major purchase, you should shop around before you commit to a price. California mortgage lenders will present you with a variety of types of mortgages, each with its own closing costs. Mortgage lenders also will give you different home mortgage loan rates, so be sure to get estimates from several lenders to get the best value.
Break Down Closing Costs
Mortgage lenders can't break down closing costs into exact numbers until they have drawn up the final paperwork. However, your mortgage lender or broker can usually estimate your closing costs based on similar deals. Mortgage lenders are required to mail you a "good faith estimate" of your closing costs with three business days of your application.
Get Outside Help
While this estimate can be helpful, it won't include closing costs not associated with the mortgage lender. Here are some of the non-lender costs to add to your estimate:
- Title insurance
- Home inspection
- Closing/escrow/settlement fee
- Recording and notary fees
Whether you go with an interest-only mortgage or a fixed-rate loan, it's important to get a good idea of your closing costs. These costs can run into the thousands and could play a vital role in you deciding what kind of mortgage you can afford.
Sources
About.com
BankRate.com
Real Estate ABC
Real Estate ABC
About the Author
Joe Taylor Jr. coaches beginning mortgage brokers to provide better customer service and to understand creative financing opportunities.
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