What is the minimum down payment I can make on a home?
There is no standard minimum down payment required for buying a home. While many first-time homebuyers are under the impression that they must put down up to 20%, that is not true. Down payments depend, on the specific program you are using to buy your home but generally lenders require a minimum of 3.5% (down based on the value of the home. Lenders will work with you to specify a minimum down payment that works for your situation.
What are closing costs and how much do they cost?
Closing costs include a variety of fees associated with closing a home transaction. Closing costs can include attorney fees, recording feels, underwriting & processing fees, appraisal and inspection fees, pre-paid property insurance, and other necessary items. These closing costs vary based on mortgage type, purchase contract, and location, but typically cost about 3% to 5% of your loan amount. Your lender will provide you with a document called the Good Faith Estimate once you decide to move forward. The GFE gives you a better idea of what the closing costs are for along with the estimated amount.
What is title insurance?
There are two types of Title Insurance: Lender's Title insurance & Owners title insurance. Lender title insurance protects your lender against problems with the title of your property that occurred before the date of the policy. It is required that you purchase lender's title insurance and it is part of your standard closing costs. Furthermore, this insurance will protect your property from mechanic liens, unrecorded liens and documents, but it will not protect your personal interest in the property.
However, if you want protection against legal issues related to the title of your home as well, you should purchase owner's title insurance, or owner's policy. This policy is usually based on the value of the home purchased, and there is a onetime fee included into the closing cost. Generally, this policy last for as long as you have an interest in the property. Examples of problems covered under owner's title insurance are: errors or omissions in deeds, forgery, fraud, and restrictive covenants.
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