Amusing as it may be, closing costs rose by 6% from last year despite this year's low mortgage rates. This is partly caused by the stricter regulations on loans which increases the costs for banks, and these costs are technically passed on to the consumers. Here are some tips that will help you in understanding the mortgage closing costs:
Third Party Closing Costs
When you are about to close on a mortgage, you will notice that you have a long list of fees to pay for. These can go from minor fees to expensive ones, depending on the kind of deal you are having. When you check on the said fees, you will see that some of these are from third parties. This isn't a weird case and it's not always because people are taking advantage of you. These costs are for necessary services provided by outside companies at the request of the mortgage lender, to make sure that all things are in order. However, it is still important that you ask, and check for yourself.
People who are first-timers in going through mortgage processes may get confused at some of the closing costs jargons. The first fee you can expect to be asked to pay for is the 'origination' fee which is the primary fee that the lender asks for creating the mortgage. After that first part, expect to hear about title insurance, flood certification, appraisal, and credit report. These are necessary things for your home buying and these can be expected to be brought up when closing.
Zero Closing Cost
It is possible that you close a deal without paying for closing costs. Although no money will be paid upfront, you're gonna have to pay for it in the long run. The lender will pay all of it in the present, and you will pay it in installment basis with an interest.
