Simple Tips For Beginning Minnetonka Homebuyers

Beginning Minnetonka homebuyers need to understand one essential aspect in the process of owning a house and sales contract, which is ‘closing costs’.Most people seem to be unaware that closing costs are usually set at 15 percent of the sales amount and loaners usually ask that you pay for it directly. Although some lenders can roll them into the loan package, it would still be advisable to identify them as early as possible so you can wisely project your funds and easily discuss what you want as far as terms of arrangement in the final price is concerned.

It may be best to keep in mind that the lender base the maximum amount offered to you not on the net price (the sales price minus the closing costs) but from the actual sales price paid by the buyer. There are various ways in which closing costs are allocated and this may need the help of your realtor and lender if only to come up with the most agreeable plan for you to stay within your budget limit.

As a home buyer, being knowledgable about your responsibilities is the first crucial step to understanding what closing costs are. As explained by Barron, the author of the book ‘Smart Consumer’s Guide to Home Buying’, homebuyers must know that custom dictates allocation of closing costs and designates buyer and seller responsibilities, and not the law, as many believes it to be.

It is the buyer who typically settles all the fees and the loan’s the discount points. The lender, on the other hand, adds all these at the end of the contract (but may vary significantly according to the financial institution concerned). Bankers typically assign this fee as part of your contract or may be waived for important customers, yet it is best that you have an exact idea what the estimated amount will be.

The buyer is also responsible in paying the premium of the homeowner’s title insurance policy and has to ensure that this be settled before the purchasing begins. Most will agree that it is beneficial to have some extra cash in your hands to pay for the premium and to avoid getting it rolled into the loan. Note also how premium cost may vary from one insurance company to another. Before signing the contract, it may be wise to do a little research particularly on the insurance policy rates of homeowners or try to scout around for other possible choices. The seller has the following responsibilities or obligations.

Sales Commissions – refers to the fees allocated to the agent of both the buyer and the seller. But these may be dependent upon the agent you are working with.

Inspection Costs – pertains to the expense of having various inspections and those that are required for homes prior to purchase.

Title Insurance – there is one misconception about title insurance since many first time homebuyers think that they will need to take care of any costs associated with the title company except it. But, the closing costs also covers the title insurance costs, making it a responsibility of the seller.

When you know what closing costs are, you can have a better idea as to what your home’s final price will be during the signing. As a matter of fact, if early on the financing process you have done so, the lender may give you necessary information like the fees you will have to pay and discount points among others.

Author and Realtor Alexandria P. Anderson helps clients to find and purchase Minnetonka real estate as well as Minnetonka homes for sale in and around the Twin Cities of Minneapolis and St. Paul.

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