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The #1 Mortgage Mistake: Paying too much for Closing Costs

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Rate shopping for a mortgage is probably the least exciting part of buying your new home or refinancing your current one, but there is more to consider than just the interest rate. 

So, how can you really save your money? -By lowering your closing costs! This is money that can be used for a larger down payment or other things you need now.

So, what exactly are closing costs? 

  • Closing costs are any fees required to set up and close a mortgage. They include any lender fees, appraiser fees, title company fees, government fees, transfer taxes, and  other third parties involved in the mortgage transaction.
  • They can range from 2% – 5% of the mortgage amount for both home purchase and refinance loans. Closing costs vary from state to state and do not include your down payment.

It is common that a No Closing Cost loan will provide even more savings than a loan with a lower interest rate for the average homeowner. No closing cost mortgages are a great alternative for buyers who otherwise qualify for a mortgage but might be short on the amount of money they have saved for their home purchase.

The Facts

  • Homeowners in the US will average between 4 or 5 mortgages during the first 20 years of homeownership.  
  • How is that possible?
    • The average homeowner will move several times.  They will also refinance their mortgage a couple of times to take advantage of lower rates or to get cash out for home improvements.

The Problem

  • Nationwide, the average homeowner paid the following amounts in closing costs in 2021.
    • $6,837 average closing costs for states that impose transfer taxes, and these costs are rising every year. The 2021 figure is an increase of $750 over the prior year.
    • $3,470 average closing costs for states that do not impose transfer taxes

The Math

  • If a homeowner has 5 different mortgages over the course of 20 years in a state that imposed transfer taxes.

5 Mortgages x $6,837 closing costs per mortgage = $34,185 total paid in closing costs!! 

The Law 

  • Every lender is required by law to provide you with a loan estimate within three business days after receiving your mortgage application. This estimate will outline the estimated closing costs and other loan details. 
  • This is the perfect time go over all of the fees with your lender, so you know exactly what to expect to pay at closing and whether or not they are within your budget.

The Solution 

  • Mortgage Warehouse offers a No Closing Cost loan program.  That’s right… 
    • $0 Closing Costs! 
  • With our program you can:
  • Save yourself the financial burden of paying closing costs at closing
  • Put more money toward your down payment
  • Keep more of your money for emergencies or other expenses
  • Put yourself in a better financial position if you plan to sell or refinance in a few years.

Call to speak to one of our loan originators today to see if our No Closing Cost program is right for you or click here for more information.