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Buying Your First Home Can Be Easy April 14, 2010

Posted by minnesotarealty in MN Realty.
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Beginning homebuyers need to understand one essential aspect in the process of owning a Minnesota house and sales contract, which is ‘closing costs’.Most people seem to be unaware that closing costs are usually set at 15 percent of the sales amount and loaners usually ask that you pay for it directly. Although some lenders can roll them into the loan package, it would still be advisable to identify them as early as possible so you can wisely project your funds and easily discuss what you want as far as terms of arrangement in the final price is concerned.

It may be best to keep in mind that the lender base the maximum amount offered to you not on the net price (the sales price minus the closing costs) but from the actual sales price paid by the buyer. Closing costs are allocated in various ways and this may require the assistance of your real estate agent and lender so that you can project your funds in the best possible means and for you to work within your budget limit.

Having knowledge about the responsibilities of a buyer is the first prerequisite to understanding what closing costs are. The ‘Smart Consumer’s Guide to Home Buying’ book’s author, Barron, explicated how important it is to be aware that contrary to the belief of many, custom prescribes how closing costs are allocated as well as the buyer and seller responsibilities as stated in the contract, and not the law.

It is the buyer who typically settles all the fees and the loan’s the discount points. The lender adds all these at the end of the contract and may vary differently from one financial institution to another. More often than not, bankers will treat this fee as a part of the contract or may be dispensed depending on the customer, but still you must figure out the exact estimated amount.

Another responsibility of the buyer is the premium of the homeowner’s title insurance policy that has to be paid and needs to be settled before the purchasing even starts. Most will agree that it is beneficial to have some extra cash in your hands to pay for the premium and to avoid getting it rolled into the loan. Note also how premium cost may vary from one insurance company to another. Make some research on the homeowners insurance policy rates or look around for more options before you decide to sign the contract right away. These costs constitute the seller’s obligations.

Sales Commissions – are the fees apportioned to the buyer’s and seller’s agents. However, these may depend upon the MN real estate agent you chose to work with.

Inspection Costs – refers to the expenses related to the home’s inspection and all other forms of inspection that may be required before the buying and selling commence.

Title Insurance – there is one misconception about title insurance since many first time homebuyers think that they will need to take care of any costs associated with the title company except it. But, the closing costs also covers the title insurance costs, making it a responsibility of the seller.

When you know what closing costs are, you can have a better idea as to what your home’s final price will be during the signing. As a matter of fact, if early on the financing process you have done so, the lender may give you necessary information like the fees you will have to pay and discount points among others.