Buyer closing costs are the extra monies that you need in order to buy a home, in addition to the down payment. This phrase will come up when you are beginning to apply for a loan or make an offer on a home, You have several options regarding how and when you pay these fees.

Buyer closing costs include numerous items

Different fees and charges are included in buyer closing costs. The fees are all listed on your Buyers/Borrowers Closing Statement, although you may need the help of a professional to interpret them. There are many documents to sign and discuss. There is nothing wrong with going through them line by line with your buyer’s agent before the meeting. Here’s what to look for with regards to costs associated with new loans:

Fees for the Appraisal

Fee for the Credit Report

Interest associated with your loan

Home Owner’s insurance (1 year up front)

Property Taxes (1 year up front)

Closing Fee to Title Company

Title Charges (owner and lenders policy)

Water Transfer Fees

Your exclusive buyer’s agent will be able to give you an estimate of the closing costs before you make an offer. That way, you can budget appropriately.

Most of these fees and charges cannot be reduced. Nevertheless, you can shop around for home insurance. This could make a big difference in you closing costs.

When are buyer closing costs paid?

Buyer closings costs are paid at the closing meeting. They will be included as a lump sum along with your down payment.

There are a couple of different ways to pay your closing costs.

You can pay your own closing costs, or, another alternative is to ask the seller to pay them. You will make this decision at offer time.

If you ask the seller to pay closing costs it generally increases the sale price of the home by the same amount. For example, you could offer $220,000 on a home and pay your own closing costs of approximately $5,000. Or, you can offer $225,000 on the same home, and ask the seller to pay your closing costs.

What are the pros and cons of each option?

A big positive is that you will not have to have the cash for these fees at your closing meeting. A negative is that you will be paying interest on your closing costs.

Pros to paying the costs yourself at closing: When you pay in “cash”, you don’t have to worry about getting a bigger loan to finance these costs. Cons: You will need to budget for these costs along with costs to move, any repairs that need to be made to the home before moving in, and down payment.

You may wish to discuss the pros and cons of your situation with your agent to decide the best course of action. It is wise to look for homes in a price range that also takes into consideration the closing costs.

Learn more about buyer closing costs. Stop by Kathleen Chiras’s site where you can find out all about how a buyer’s agent can help you with closing costs.