It would be nice if the only thing you had to worry about when you buy a home is saving for the down payment. Unfortunately, there are some additional costs that you should be prepared to pay — closing costs. These expenses typically amount to three to five percent of the amount of the mortgage and they can include such items as title fees, loan fees, and escrow charges as well as prepayments of mortgage insurance, real estate taxes, and hazard insurance (also known as “homeowners insurance”).
In cases where you put down less than 20 percent of the purchase price and the lender requires you to pay for mortgage insurance, the lender may ask (or require) that you pay a set amount every month into an impound account under the lender’s control. These payments then accumulate over the course of the year. At the end of the year, or when payments are due, the lender takes this money out of the account and pays your mortgage insurance, property taxes, and hazard insurance for you.
Escrow cannot be completed until all the escrow instructions have been satisfied and all parties have signed escrow documents. Once this happens, it will be time for the big moment — you will be handed the keys to your new home!
Looking for More Information on Home Ownership?
We hope the information we’ve provided will be helpful to you as you go through the process of buying your first home. However, we have by no means given you an exhaustive collection of information on the subject. The good news is CCCS of Orange County is a HUD approved Housing Counseling Agency with specially trained staff on hand to help you make wise decisions as you go through the home-buying process. In addition, we provide free housing education for first-time homebuyers, people behind in their mortgage or rent payments, and seniors looking to create a better cash flow.
Contact CCCS of Orange County today to find out more about these valuable services and to obtain the answers you need to make sure your quest for homeownership is successful!