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Closing Cost  


A closing cost is something that must be paid on any home that is purchased, but some people do not include that into their budget when they are house hunting and deciding how much they will be able to afford. There are some things you might want to know about closing costs, whether you are purchasing a new home or doing a mortgage refinance. 


There is a lot of work to be done for you to get a loan, and the closing cost is basically all of these little jobs added up into one cost; the closing cost. This pays for everyone from the loan officer, the title clerk, the appraiser, to the underwriting company. Without all these people, your loan would not be happening and you would be stuck wondering what in the world you should do. 


Processing your paperwork will probably be a fee to you, listed on the Good Faith Estimate as a processing or document fee. Many of the other origination fees are paid by the lender. Some of the other costs that will be included for you are the first year’s insurance premium, a reserve for property taxes, and the down payment. To protect their investment, the lender is who requires that there be home insurance. When looking at the grand list of fees you are paying, you might see that the commission for the realtor is also there, also including title fees that pay for the clerks who handle the paperwork and get it all recorded in history! Whether or not you have poor credit and have to get a bad credit mortgage, or if you are getting a conventional loan, these fees will probably be included in every closing cost. Each lender is different and when working with different loan officers, you might compare each closing cost and see what fees they include so that you can get the loan with the lowest closing cost. 


You are not allowed to actually hand the loan officer cash to pay for the closing costs, but you must use a verified check or have the funds wired to your title company. The money also needs to be seasoned and has to have been in the account for at least two months, which is a protection to the lender so that they can see that you are reliable at saving and budgeting. If the lender notices that you have not been saving your money in order to get in a house, they may not be able to trust you and might think that you are too loose with your money, which could lessen your chances of qualifying for that loan. Remember that when you are buying a new home or going through mortgage refinancing, that you will want to be sure and keep your money in the same account so that you can prove to the lender that you are reliable.