July 13, 2024

Home Purchase Costs

Usually, home buyers have to pay between about 2 to 5 percent of the purchase price of their home in closing fees. As an example, if your new home cost $150,000, you might pay between $3,000 and $7,500 in closing costs. … This is just an estimate, and many of the fees listed can change.

Home Purchase Costs
Home Purchase Costs

Before signing a purchase contract on your new home you should check with your real estate representative for an estimate on your total closing costs and fees. Usually, in a new buyers typical home purchase, the largest cost and fees are those imposed by the mortgage lender. Therefore, when applying for, and getting a preapproval for your new home mortgage, your lender should give you an estimate of not only what their fees are but also the total fees that you would be looking at to complete the purchase transaction.

Home Purchase Costs

Depending on the type of loan that you are applying for, and the type of purchase, some lenders will bundle all or a majority of the closing cost into the loan balance. The advantage of doing this, is that it substantially reduces the amount of cash required at the closing. But, it is certainly not a free ride, as your outstanding mortgage balance will be increased by these cost and you’ll end up paying interest on this over the life of the loan.

Personally, I would advise new buyers prior to entering into any purchase contract, to apply for, and get a loan pre-approval. As I said before, at the loan pre-approval the lender should give you a written estimate of all the cost involved based on the outstanding balance of the loan that you are preapproved for as well as the total purchase price of the property.

In today’s San Diego real estate market, there are many sellers who will not even entertain offers and less they are accompanied by a lenders pre-approval letter. So, I would recommend all new homebuyers first step in the buying process is to meet with your selected home mortgage lender, whether that be a bank or credit union, and get that very important preapproval letter. Most lenders will not charge for this service. But, if there is a charge it’s usually just the cost for running your credit reports.

For additional information on home approvals see this informative article

Home Purchase Costs