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Buying a house can be complicated. Many people dream of owning their own home. Home ownership in the United States is very high. Many people in America want to buy a house. Part of the traditional home buying process is getting a mortgage to help pay for it. A mortgage allows people to buy a house. The bank lends the buyer much of the money for the home price. In turn, the buyer agrees to pay the mortgage back, usually in increments every single month. This is known as interest. Interest on a mortgage is tax deductible. Getting the right mortgage is a process. This process can be as quick as a week or two or as long as several months if the mortgage is particularly complicated. Any home buyer needs to understand the mortgage process in great detail before they start buying a house. Doing so can help them feel comfortable and confident at every stage in the home buying experience. It can also help the buyer know what to expect before they start, making the process more familiar and less scary.

The Process

The process of creating a mortgage typically starts when the buyer heads to a bank. Banks lend funds to buyers all the time. A buyer will need to pay specific costs along the way. This is particularly true at the very end. The very last stage of the mortgage is known as the closing. The closing is when the literal exchange of property ownership takes place. After this process is completed, one owner will move out and another can take possession and move in the house. The closing is the completion of the home buying process where all documents are signed and each party gets to move on. Any home buyer should know that the closing typically involves the payment of certain costs. A home buyer needs to know what costs they can expect to pay. While mortgage costs costs can vary from place, in general, most mortgages will involve the payment of certain specific costs.

Fees Related to Property

Most homeowners are asked to pay certain types of fees. One kind of fee are fees that are related to property. An appraisal fee is a fee that helps the lender determine what the property is worth. Bank officials need to make sure the property is worth enough so they can get their money back should the buyer wind up defaulting on the mortgage. Another kind of fee that the buyer will typically be asked to pay is a home inspection. The lender needs to have the home inspected in order to make sure the house is in good condition. A home inspection is designed to help reveal both minor and major flaws. If there are major flaws, the price may have been adjusted to account for this as well as the mortgage.

Fees Related to the Loan

The applicant may also need to pay other kinds of costs at the closing. The buyer can expect to pay an application fee just to get the mortgage. If the buyer isn’t using a new mortgage but taking over an existing one, they expect to pay an assumption fee instead. Some states require the mortgage applicant to have a lawyer with them as they buy the house. In that case, they will need to pay for an attorney to be present at the closing. Some buyers may be paying what are known as points. Points are pre-paid mortgage interest. Such funds are due during the closing process. Another fee that may be required is known as a loan origination fee. This fee is often a huge one and will include the work required to process all paperwork required to get the loan. In most instances, this hefty fee will be about one percent of the entire loan.

Other Fees

The mortgage closing will also usually require the payment of certain other fees. If the applicant is putting less than twenty percent down, they will be asked to pay for insurance costs that will cover the lender’s needs if the mortgage goes into default. A borrower may also be asked to pay fees related to specific mortgage companies such as the Federal Housing Administration. The buyer may also need to pay fees such as condo fee in advance. Many buyers can also expect to pay property taxes for a month or two before they move in. Most lenders will also require the buyer to pay for a title search in order to make sure there is no other claim to the property. Should there be an error, the buyer will also pay for insurance for both the lender and the buyer to protect their interests in the property.