Closing Costs

When buying a new home, you may be focused on finding a mortgage program that has a down payment requirement that is manageable for you. However, some home buyers will overlook the costs that they are responsible for at closing. These costs can vary, but it is common for home buyers to pay between two to three percent of the loan amount in closing costs, if not more. This can be a hefty sum of money that you will need to budget for. The good news is that there are some steps that you can take to keep these costs to a minimum.

Shop For a Title Insurance Company

There are numerous fees that will be listed on your closing statement, but one of the highest fees is the title company charge. The title charges vary from company to company. Most lenders and real estate agents have preferred title companies that they want to work with, but you typically have the ability to shop around and compare the fees. You simply have to inquire what the lender’s or real estate agent’s preferred title company is and what the fees are. Then, you can shop around to find a better deal.

Consider Your Escrows

Another large expense on your closing statement will be the prepaid taxes and insurance as well as the escrows for these amounts. One idea is to ask your lender to waive escrows. This request is not always granted, but it can drastically reduce the amount of money you need to pay for out of your pocket at closing. You can also shop around for a better deal on property insurance to lower your escrow expense.

Ask the Seller to Pay for Closing Costs

While you are ultimately responsible for many of the closing costs, you may be able to structure your sales contract so that the seller pays for some or all of the costs. This is generally something that may be negotiated at the time the original offer is made, but you could also submit a revision request to the contract through your real estate agent.

Understanding what the closing costs are and which costs can be negotiated or shopped around for is important. You can also look at how gifts from the seller or other parties can be used to reduce your out of pocket expenses when buying a new home.

Home buyers today may be concerned about finding the perfect home to purchase, but they are also often concerned with the process of applying for a mortgage. The loan application process itself may seem daunting, but many are concerned about finding a great deal on their mortgage. This may include getting a great interest rate and finding a program with low closing costs. The Fannie Mae HomePath program and closing cost assistance program is a beneficial option for many, and you may benefit from learning more about it.

What Is This Program?

The Fannie Mae loan program has been around for many years, and it is designed to provide borrowers with a lower interest rate than some of the other programs available. It also has easier underwriting guidelines than some of the other options.

However, the HomePath program started in 2009 in response to the rising number of foreclosures at that time. This program gives buyers a great opportunity to find homes that were financed through Fannie Mae and that were foreclosed on. The goal was to help Fannie Mae sell some of the homes they had foreclosed on more quickly by providing buyers with easier underwriting requirements and closing cost assistance than they otherwise would have access to.

What to Expect From This Program

If you are not familiar with this program, you may consider exploring it in more detail. The program’s website has many listings for foreclosed properties, and this makes it easy for you to find a great deal on a property in your area.

You should be aware that there are essentially two programs under the HomePath umbrella. One is designed to resemble a traditional mortgage program with closing cost assistance and easier underwriting requirements. The other is designed for properties in need of renovations, and with this program, you may be able to borrower more than the current value or sales price of the house.

While you may want to find the perfect home and get it at a great price, you also want to set up affordable financing. When a traditional buying and mortgage experience is not right for you, the HomePath program offered by Fannie Mae is a great option to consider. You can spend time exploring the foreclosed properties on the website today, and you can also work with your trusted mortgage broker to learn more about the HomePath financing options that are available to you.