Closing costs include a variety of different fees associated with buying a home. These costs include fees for a property inspection, appraisal, mortgage insurance and title origination. Some homeowners may also opt to purchase a home warranty or roll their escrow payments into their loan, which will increase the closing costs. Research from the industry website BankRate.com shows South Carolina has some of the nation's lowest average closing costs. The Real Estate Procedures Closing Act requires mortgage lenders give buyers a good faith estimate regarding their closing costs prior to the closing date. Residents in South Carolina can use the following tips to estimate their closing costs prior to closing.
Ask your preferred lender for a good faith estimate. You can use this figure to compare your estimated costs as you proceed toward closing.
Use a website calculator, like the one found on LoanPage.com, to estimate your closing costs. Enter the required fields, which include the loan amount, the value of the home and the fees discussed in the introduction to this article. Remember this number is only an estimate; only your lender can supply you with the final closing costs as you head to closing day.
Decide how much money you want to put down on the property. Some lenders will require you to make a down payment of at least 20 percent to avoid mortgage insurance. Other lenders will allow you to buy a home with nothing down.
Calculate the cost of your mortgage insurance. If you put down a large enough down payment, this won't be necessary. You can choose to either lump your mortgage insurance payments in to the loan itself, or opt to pay it in monthly installments. Mortgage insurance payments are no longer needed once you've paid off a certain percentage of the mortgage, typically 20 percent.
Factor in your loan origination fee. This fee will vary depending on the purchase and appraisal price of your property. In general, the higher the property's value, the higher the origination fee.
Add up fees for your home inspection, property appraisal, escrow, attorney, notary, tax and title paperwork. Unlike the origination fee described in Step 5, these fees are usually set prices.
Add in pro-rated and recurring costs. This will include any homeowner's association fees, cost of a home warranty and tax or insurance costs. These are all optional costs. Some neighborhoods do not have homeowners' associations. Many homeowner's choose not to purchase a home warranty. You can also choose to pay your tax or insurance costs (called "escrow") separately from your mortgage.
Combine the totals from Steps 3 through 7. This will give you a good idea of what you should expect to pay when you close on the property. If the value is significantly different than the good faith estimate provided to you by your lender, call your mortgage company to go over the numbers.
Negotiate with your appraiser, home inspector and closing attorney for a lower fee. These parties are not employed by the mortgage company, and can set their own prices.
If you have worked with a lender before on a mortgage, ask for a loyal customer discount. These discounts are usually more common when refinancing a mortgage, when the loan origination fee may be discounted, since the loan is for the same property.
Expect your closing costs to change over time. The closer you get to your closing date, the more set in stone that figure will become.
The process of estimating closing costs in South Carolina is similar to the process elsewhere in the United States; the steps outlined above can be used to calculate costs across America.
It is illegal for a mortgage lender to provide you with false or misleading information regarding your closing costs. If you think your lender may have broken the rules established by the Real Estate Settlement Procedures Act, contact the U.S. Department of Housing and Urban Development to file a complaint.
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