Closing costs – or settlement costs – are an important component to the cost structure of buying a home. Whether it’s a pre-existing home or a newly constructed one, you will have to pay closing costs in addition to your down payment. But what exactly constitutes a closing cost?

 

Closing costs are miscellaneous fees that are charged by the individuals involved in the home sale. For example, your lender may charge you for processing your loan, the title company may charge you for paperwork handling fees and you may have to pay a fee to government offices for recording the deed. Closing costs also include taxes, inspections, title insurance and homeowners insurance.

 

Closing cost amounts will vary from one homeowner to another. However, the rule of thumb is the cost should stay within the range of one and eight percent of the home’s sale price. Two to three percent is a common rate for most. This could mean an additional $6,000 added onto a $200,000 home you’ve just purchased, or over $10,000 for a $350,000 home.

 

At USA Mortgage, our St. Louis mortgage lenders will work to provide you with the most accurate estimate of closing costs on the home that you are planning to purchase. This is referred to as a “Good Faith Estimate” (GFE). This estimate includes an itemized list of fees associated with the loan and one that is provided within three business days of applying for the loan. It is important to note that these costs are merely an estimate.

 

After paying a significant down payment on a home, the last thing any near-homeowner wants to do is pay out more money for closing costs. Our St. Louis mortgage company can help to eliminate any surprises with a GFE and individualized guidance throughout the entire home buying process. For more information on closing costs or to get started working with a St. Louis mortgage company leader, contact us today!