buyer ’ s closing costs . The purchase price is adjusted to cover the needed costs ; the only catch is the appraisal must be at least the purchase price .
WHAT ARE DISCOUNT POINTS ?
Discount points allow you to lower your interest rate . They are essentially prepaid interest , with each point equaling 1 % of the total loan amount .
Generally , for each point paid on a 30 year mortgage , the interest rate is reduced by 1 / 8 ( or . 125 ) of a percentage point . When shopping for loans , ask lenders for an interest rate with 0 points and then see how much the rate decreases with each point paid . Discount points are smart if you plan to stay in a home for a longer length of time , since they can lower the monthly loan payment and the difference will add up over several years .
Points are tax deductible when you purchase a home , and you may be able to negotiate for the seller to pay a portion of them .
WHAT ARE MY CLOSING COSTS ?
Your lender is required by law to provide a Loan Estimate of all costs involved in closing your loan .
The typical costs involve the following :
• Escrow closing fees
• Loan Origination Fee ( approximately 1 % of loan amount )
• Recording fees
• First year of homeowner ’ s insurance
• Interest ( paid from the date of closing to the end of the month )
• First premium of mortgage insurance ( if applicable )
• Prepayment of reserve accounts ( usually 3 months ) for property taxes and homeowner ’ s insurance
• Title insurance
• Lender loan fees ( such as document preparation , tax service , etc .)
• Home inspection
AN ORIGINAL PUBLICATION | HUGHES REAL ESTATE GROUP OF SILVERCREEK REALTY GROUP | 11