Closing costs are fees that are a part of every real estate transaction, whether you purchase with cash or finance. They are also one of the most commonly misunderstood aspects of buying a home.
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In the state of Maine, the seller pays for their deed, transfer form, state transfer tax, and typically the commission. The buyer pays for their title search, state transfer tax, and the execution of the closing documents also known as closing costs. Both sides pay miscellaneous fees, such as recording fees and courier fees.
There are many more fees for buyers who choose to finance. In the link below you will see a list of such fees outlined with a brief explanation.
Two fees often the most misunderstood are the origination fee and points. The origination fee is your payment to the mortgage broker. This fee is usually standard within the mortgage firm, but if you feel it’s high I recommend asking for a breakdown or comparing it with other firms. A good mortgage broker will be happy to provide you this information.
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Points are probably the second most confusing fee. Points can be paid by the borrower/buyer to reduce the interest rate if it’s unfavorable for reasons like bad credit or bad timing. You are essentially buying the mortgage rate down at closing. The seller can also be asked to pay points toward the buyer’s interest rate.
Understanding the basics ensures that you’re prepared. Take a look at this post provided by Blue Water Mortgage, complete with a bonus checklist.
