When purchasing real estate, it often seems that the costs never end. The additional expenses, on top of the basic down payments, only add to the stress of making such a large investment. These additional costs are known as closing costs and they are often intended to confuse the buyer. For this reason, it is absolutely necessary that the borrower pay special attention to the costs brought to the table by both the lender and the real estate agent when taking out a mortgage and closing the deal on a home.
Recently, more and more, the malevolence of certain lenders out there has risen to the surface. During an especially vulnerable time for young families, when they are anxious to purchase a home of their own, many lenders will squeeze as much money out of them as possible. Lenders are not required to provide estimates of the expected closing costs before the potential buyer submits his or her application. This makes it very difficult for borrowers to compare closing costs. However, there is the Good Faith Estimate (GFE) developed by the Federal Government, requiring the lender to display charges to the borrower three days after he or she applies for a loan.
In addition to the purchase price of a home, there are basic closing costs that the buyer should generally be aware of. These include, but are not limited to: mortgage fees, costs for inspection, homeowner's insurance, property taxes, title insurance, and settlement fees. On the other hand, sellers are expected to pay costs of their own and these can include: loan payoff fees, real estate commission (this fee may be shared with the buyer), repairs, and transfer taxes.
It is imperative that the buyer monitor closing costs carefully and take advantage of all resources. These can include comparisons made by the real estate agent with similar, recent real estate purchases made in the area.