What to Expect in Closing Costs

Buying a home, whether in Parkland, Coral Springs or anywhere else in the country, can be a huge undertaking. In fact, it may be the biggest financial decision you make in your life. Saving up to purchase your dream property takes time and perseverance. But, if your only focus is saving for the downpayment, you may be in for a surprise. There are a host of other costs involved in buying a home. In addition to the downpayment, the following are what you can expect to pay in closing costs:

If you put less than 20% of the home's purchase price down on your Parkland home, you will be required to pay Private Mortgage Insurance (PMI). This can run anywhere from 1/2-1% of the total cost of your loan. Lenders require you to pay PMI to cover them in case you default on the loan.

Your credit score is what lenders use to determine your interest rate. You are entitled to one free report every year from each of the three credit reporting agencies (Experian, TransUnion, Equifax). You can access your report at AnnualCreditReport.com (the only official free reporting service). However, if you want to see your actual score, you will need to pay a small fee. This is recommended because you can then see and correct any mistakes you find before you apply for a Parkland home loan.

Mortgage lenders may allow you to pay points. When you pay points on your loan, you can lower your interest rate. However, this means you need to pay more money at closing. Typically, one point equals 1% of your loan total. This, in turn, reduces your interest rate by 0.25%.

Whether your Parkland home is older or a newly constructed home, you will need a professional home inspection. This will help identify potential problems the home may have that aren't necessarily visible in a simple walk-through. If your inspection reveals that a large ticket item needs work or replacement, this can be helpful in negotiating a purchase price.

All lenders charge loan origination fees. These are fees for underwriting your loan and creating the paperwork necessary to prepare your contract. Other fees involved include insurance escrow, property tax escrow, land surveys, title/deed recording and notary fees.

Everybody's situation is different. When you buy a Parkland home, talk to your real estate agent to find out exactly what you can expect to pay for your closing costs. That way, you aren't caught by surprise when you sign on the dotted line.

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If you have questions about Somerset or any other , please call Salma Dhanji at (954) 816-0232.

Originally posted on my Parkland real estate blog here: http://www.trulia.com/blog/salmadhanjiteam/2012/06/what_to_expect_in_closing_costs.