When you purchase a home with a mortgage, closing costs and prepaid expenses are due at closing, in addition to the down payment. Closing costs include items such as underwriting fees, processing fees, appraisal, credit report, title insurance, title escrow, and recording fees. These are the costs that are paid to obtain the loan. Prepaid expenses include one year’s homeowner’s insurance premium, a number of pro-rated months of homeowner’s insurance and real estate tax payments to fund an escrow account, and a certain number of days of interest for the loan. If you are purchasing a home that is located in a homeowner’s association (HOA), there may be HOA fees due at closing, too.
If you have any questions on your closing costs and prepaid expenses, contact us and we can help!
** If you would like to see the other videos in the first-time homebuyer series, click link below.
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