What Makes Up Your Closing Costs?


If you are in the process of buying a home with a VA loan, you may have heard that you can make the purchase without a down payment. However, you still need to save up money for your VA loan closing costs. This can cause you to wonder what exactly makes up closing costs so that you know what you are saving for. 

Title Search

You can expect to pay for a title search to be done as part of the home buying process. This is when a company will help research the deed to the home and find out if the home is in the clear to sell to you. This involves looking into how many mortgages are on the home, if the seller's name is on the deed, if there are other owners that have a claim to the property, and if there are any liens on the property that you could be responsible for afterward. 


Your city may require that you pay the taxes that will be owed on the property for the rest of the year at the closing. Depending on which time of year you buy the home, this could end up being a big or small expense that is added onto the closing costs that you did not expect. 

Lawyer Fees

Chances are that you will have a lawyer to navigate the paperwork that needs to be drafted and signed as part of buying a home. The cost of hiring a lawyer is typically paid when you close on the home, which is why this cost can be rolled into your closing costs. Some lawyers only charge if the home is purchased, while others will give you a bill for their services even if you back out of the sale. 

Loan Origination Fees

The mortgage lender that you selected will want to be paid for the time they spent working on your mortgage. Much like with your lawyer, these are costs that are paid once you close on the sale of the home, and they are typically based on a percentage of the price of the home. The loan origination fee is typically how your lender makes money, especially if the loan is later sold to the government and your original lender just manages the loan. 

These are just a few of the closing costs you can expect when you purchase a home. Make sure you have enough money saved up to cover these expenses. 


23 October 2019

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