What you need to know about closing costs
While they come into play at the very end of the home buying process, closing costs can be a substantial amount of money and should be considered well before the day you sit down to sign all the final papers. Understanding closing costs, both what is included in them and how they are calculated, can better prepare you for a smooth loan closing.

What are closing costs?
Closing costs refer to a collection of fees for different services that are needed to finalize the financing and purchase of your new home. Typically, the buyer is responsible for paying the majority of the closing costs. Closing costs must be paid to finalize the transaction.

Your lender should address closing costs as part of the financing process. They can help you get an accurate estimate based on your situation and discuss different programs that may be available to help you cover these costs. As you approach your closing day, you will be provided a final summary of closing costs so you can be ready to pay them.

What do closing costs cover?
While there are some common fees and services that are covered by closing costs, each loan situation can be different. Also, different states and loan programs have stipulations that impact the types of services and inspections that are required, which will affect the amount of closing costs due. Here are some of the items that might be included in your closing costs:

  • Home appraisal fees
  • Discount points used to lower your interest rate
  • Flood zone review
  • Local government property recording fees
  • Loan origination fees for underwriting and loan processing services
  • Pest inspection
  • Prepayment of the interest accrued between the closing date and your first payment date
  • Tax research fees
  • Title insurance to protect the lender from ownership claims due to title errors
  • Title research fees to confirm the seller is legally able to sell the property

Paying for closing costs
When it comes to paying closing costs, buyers have different options to consider, including:

  • Paying out-of-pocket
  • Asking your lender about any available state, county or city first-time homebuyer grants or closing costs assistance programs
  • Working with your real estate agent to negotiate a concession for the sellers to pay some of the closing costs
  • A monetary gift from a family member

Get informed
Don’t let closing costs be a barrier to purchasing your home. At Fidelity Bank, our lending professionals stand ready to help you through every step of the home-buying process, making sure you understand aspects like closing costs. If you have questions about mortgage financing, or you are ready to take the next step toward purchasing a home, contact us today.


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