What can you expect to Pay for Homepath Loan closing costs? Out of the entire home buying process, closing costs can often be the least understood pieces. At Homepath Lenders Group, we will take the time to address your questions and guide you to answers.
Closing Costs Although they tend to vary from lender to lender, closing costs generally are considered any costs tied to the purchases of a new home. Today, these costs range from 2 and 7 percent of the home's purchase price and include three basic categories:
Prepaid Expenses Prepaid expenses include homeowner's insurance, mortgage insurance and the costs to set up an escrow account. When closing a homepath mortgage, you will have no mortgage insurance, and no appraisal fees, so this number will be lower than a traditional home loan. An escrow account is when a lender will pay the annual insurance premiums and various taxes on the borrower's behalf. The amount that goes into this account is based on the first year's premiums; an additional amount also is included to pay for future premiums. Because they vary based on the type of property and the time of the closing, prepaid expenses are difficult to determine.
Mortgage Points A mortgage point is equal to 1 percent of the mortgage loan amount and actually helps reduce the loan's interest rate. For example, depending on prevailing rates, a $100,000 mortgage might be obtained at 7.75 percent with 2 points, or at 8.25 percent with no points. Obtaining the lower interest rate would cut the mortgage payment by about $35 a month, but would require $2,000 -- or 2 points -- up front at closing.
Out-Of-Pocket Expenses Fees for appraisals, attorneys, credit reports, deed recording, tax services and other miscellaneous expenses make up the out-of- pocket expenses. Usually performed by a third party, these fees for services are directly charged to the borrower. The majority of out-of-pocket fees are necessary and legitimate; however, if the borrower encounters a fee that causes confusion, he or she should ask the mortgage professional about it. The beauty of the homepath mortgage, however, is that a lot of these fees will be eliminated. That's what makes the Fannie Mae homepath loan program so enticing. It allows for the buyer to purchase a home without massive closing costs and fees. Each loan will be different. If you're financing a traditional home purchase or doing a refinance, your closing costs will be higher than those associated with the Homepath mortgage program.
Purchasing a home is one of the largest financials investments you will ever make. It's vital that you understand it fully and completely so that you avoid unwelcomed surprises and are confident in every step you take towards your new home. Knowing about closing costs and fees is just the beginning. Your best bet, give Homepath Lenders Group a call and we'll guide you through the process step by step, and make sure you understand the ins and outs of whichever mortgage program fits your needs
What is HomePath?
A HomePath Mortgage allows a borrower to purchase a Fannie Mae-owned property with very attractive financing, including a low down payment. Flexible Mortgage Terms No Appraisal Fees No Mortgage Insurance
Expanded seller contributions to closing costs are allowed.