What to Expect at Closing

What to Expect at Closing


 

Out of the entire home purchasing process, closing costs are often the least understood pieces. Because of that, we will take the time to address your questions and offer answers.

Closing Costs

Although closing costs tend to vary from lender to lender, they are generally considered any costs tied to the purchases of a new home. Today, these costs range from 2 to 7 percent of the home’s purchase price and include three basic categories: prepaid expenses, mortgage points, and out-of-pocket expenses.

What to Expect at Closing

Prepaid Expenses

The following items are prepaid expenses: homeowner’s insurance, mortgage insurance, and the costs to set up an escrow account. An escrow account is when a lender pays the annual insurance premiums and various taxes on the borrower’s behalf. The amount that goes into this account is based on the first year’s premiums; an additional amount also is included to pay for future premiums. Because they vary based on the type of property and the time of the closing, prepaid expenses are usually difficult to determine.

Mortgage Points

A mortgage point is equal to 1 percent of the mortgage loan amount and actually helps reduce the loan’s interest rate. For example, depending on prevailing rates, a $100,000 mortgage might be obtained at 7.75 percent with two points, or at 8.25 percent with no points. Obtaining the lower interest rate would cut the mortgage payment by about $35 a month, but would require $2,000 — or two points — up front at closing.

Prepaid Expenses

Out-of-Pocket Expenses

The following items are out-of-pocket expenses: fees for appraisals, attorneys, credit reports, deed recording, tax services, and other miscellaneous expenses. The borrower typically pays the fees for these services, which are usually performed by a third party. The majority of out-of-pocket fees are necessary and legitimate; however, if the borrower encounters a fee that causes confusion, he or she should ask the mortgage professional about it.

Purchasing a home is one of the largest financial investments you can make. It is important that you understand it fully and completely so that you avoid unwelcomed surprises and are confident in every step you take towards your new home.

Out-of-Pocket Expenses

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Mortgage Investors Group, based in Tennessee, offers residential financing in a number of states in the southeast, See MIG Service Areas. Terms and conditions to apply to home financing. We want to share with you the loan terms vary based on several characteristics and your financial profile. These include but are not limited to loan program, loan purpose, occupancy, credit history, credit score, assets, and other criteria per loan type. The repayment terms and interest rate may vary from time to time. The terms represented here are based on certain assumptions outlined below and/or noted on the loan outline page. Additional details concerning privacy, program disclosures, licensing specifics may be found at migonline.com Legal Information.

MIG Loan Officers will help gather the information needed for an individual assessment to provide home financing which matches the loan characteristics with your home financing needs based on your financial profile, when you are ready to begin a full loan application. For estimates and general information before that step, the basis for which the mortgage financing information are as follows:
  • Rates are subject to change at any time.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Payments will vary based on program selection, current rates, property location, etc.
  • Not all programs are available in all states.
  • Some loan programs may not be available to first time home buyers.
  • Terms and conditions apply, which may include restrictions or limits per loan program.
  • Information is generally based on primary residence occupancy with no cash out when refinancing.
  • Unless otherwise stated, terms shown are estimates based in part on credit score of 700 or higher; owner occupancy, escrow account is established for taxes and insurance(s); debt-to-income ratio no higher than 43.0%; PMI applies to conventional loan programs over 80.0% LTV; VA,FHA & RD require insuring fees included in loan and/or payment; fixed rate, 30 year term.

An MIG Loan Officer is available to help with your financial details to determine which characteristics apply to your situation for a personalized look into which loan program best fits your home financing needs. Please use the Find a Loan Officer link or reach out to Mortgage Investors Group at 800-489-8910. Equal Housing Lender 1.2020