When we meet with potential home buyers, we always discuss not only what their down payment will be, but what their share of the closing costs will be.
Often, these home buyers have already met with another lender yet the other lender didn’t say anything about closing costs that the buyer would pay. These buyers thought they only had to have their down payment, and that the seller paid all fees at closing.
When going over closing costs, we cover the fact that most of the closing costs have nothing to do with the lender but are rather title and escrow fees. We explain that the seller may or may not help them with these closing costs and that as the buyers in today’s market, they should expect to come to closing with anywhere between $4,000 to $8,000 in addition to their down payment. In other words, buyers may have the down payment plus part of the closing costs.
Because of this, it’s important for borrowers to shop their mortgage around. If they are already paying closing costs, some lenders might also charge high origination and discount points and this can make the cash needed to close that much higher.
As always, shop your mortgage but be sure to include a trusted local mortgage company like Indigo Mortgage. We’ve been serving New Mexico home buyers since 2003.