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Home Loan Lingo

The Price You Pay First

The words Down Payment often cause people rent property, deterring them from even considering the purchase of a home. Those words make owning a home sound so darn expensive and out of reach! Well guess what? This false assumption may be more costly than your down payment. You need to know that down payments are not price tags, and you can obtain a home loan to pay off the cost of your home.

Although you have options and help from lenders like Countrywide, by no means, is the mortgage going to be completely free of any financial obligations. You must be prepared for all of the costs, not just the down payment. Like posing interest in a college, or making a submission for acceptance into an organization or business: it costs to apply.

Closing costs in the home loan world are charges for processing your loan and mortgage.
Some of these charges are standard and mandatory, while others you can make in order to lower your loan’s interest rate.

The closing costs you pay do not go directly to your lender. They go to the government and to your mortgage broker if you are not using a direct lender. Usually closing costs come to about three to six percent of the amount of the loan.

When you first turn in your application you pay fees to your lender. These are called third party fees and go to people like your appraiser. You may also be paying a credit report fee to the company who issued your credit report.

Lenders are then required by law to give you a document called a “Good Faith Estimate” which gives you the lender’s best guess what your closing costs will amount to. Keep in mind that these are estimates and are not always correct due to variation in geography, loan specifications and other considerations.

Some fees you will pay for closing include commission for your real estate agent, an origination fee, point that are added to your rate to make the APR, a settlement or closing fee, title insurance, property taxes, attorney’s fees, city and state charges, survey cost, pest inspection and flood check.

Also know that there are pre-paid closing costs required at the time of purchase, which is the time you officially contract your loan. These fees are mostly to protect you during the loan and include interest, homeowners’ insurance, private mortgage insurance and escrow or impound insurance.

This may sound like a ton of charges, but you are able to lump some of these costs into your actual loan. This is probably a good idea if you are tight on cash going into the purchase but you will have more later on in the loan.

It is good for you to know exactly what all of these terms mean in order to know what all of the costs are. Contact a Countrywide representative and he or she will be happy to explain all of these closing costs in further detail.

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