Associated Financing Costs
There are so many associated costs when closing a home loan
that it could make you dizzy. Closing costs are the actual expenses
that the lender incurs in the origination of a new home loan.
Some of these costs are related to your loan application while
others are related to the house itself, such as the appraisal
of the property.
Other associated financing costs for buying a home include
payment to the lender for processing your application, such
as the loan origination fee. All of these costs are lumped into
a broad category called "closing costs." Unless the seller offers
to pay them for you, closing costs are charged to the buyer,
and often run between 2 and 3 percent of the amount being borrowed.
Because different states have different fees and taxes that
are a part of these costs, it's impossible to generalize nationwide.
It is important to remember that you should talk with a reputable
lender ahead of time about what costs you can expect to pay
in your part of the country.
Loan discount points are another cost that you should be aware
of. In essence, loan discount points are a form of prepaid interest.
One discount point is exactly equal to one percent of the amount
being borrowed. It is paid in cash at closing to the lender
as a form of interest.
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