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Everything You Need to Know About Closing Costs for Your New Home

Buying a home is an exciting adventure, but it comes with its share of complexities. One aspect that often surprises homebuyers is closing costs. At ONE Presidential Mortgage, we aim to demystify these costs so you can move forward with confidence. Here’s everything you need to know about closing costs, why they are necessary, and how to manage them effectively.

What Are Closing Costs?

Closing costs are the fees and expenses you pay when finalizing your mortgage. They are separate from your down payment and can include a variety of charges such as loan origination fees, appraisal fees, title insurance, and more. Generally, closing costs range from 2% to 5% of the home’s purchase price.

Key Components of Closing Costs

Here’s a breakdown of the most common closing costs you might encounter:

  1. Loan Origination Fees: Fees charged by the lender for processing the loan application, covering costs like underwriting and preparing your mortgage.

  2. Appraisal Fees: The cost of determining the market value of the property to ensure it matches the loan amount.

  3. Title Insurance: Protection for both the lender and the buyer against potential disputes over property ownership.

  4. Home Inspection Fees: While optional, home inspections are highly recommended to identify any issues with the property.

  5. Credit Report Fees: Charges for pulling your credit report to assess your creditworthiness.

  6. Attorney Fees: In some states, an attorney must be present at closing to handle legal aspects of the home purchase.

  7. Recording Fees: Fees paid to the local government to record the sale of the property and the new mortgage.

  8. Prepaid Costs: Includes property taxes, homeowner’s insurance, and interest that accrues before your first mortgage payment.

Why Are Closing Costs Necessary?

Closing costs cover essential services that ensure a smooth transfer of property ownership and secure the lender’s interest in the loan. They facilitate proper transaction recording, property value verification, and protection against potential legal and financial issues.

Closing costs are an integral part of the home-buying process, and understanding them can make your journey smoother and less stressful. At ONE Presidential Mortgage, we are committed to providing clear, concise information to help you navigate the complexities of home financing. By knowing what to expect and how to manage these costs, you can confidently move forward toward owning your dream home.


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