Buying a home isn’t just about the down payment and the cost of the property. In fact, it involves closing costs as well. These costs come along when you finalise a home and proceed with the purchase. In this blog, we will understand closing costs and additional expenses that home-buyers must be aware of.
Understanding closing costs: what are they?
Closing costs occur when you complete the property purchase. Both buyers and sellers bear these costs during the final stage of a real-estate transaction. The closing costs include various legal obligations and services.
What are common closing costs that buyers need to consider:
Loan origination charges:
Getting a home loan through a bank or financial institute includes administrative costs for processing your application. It usually comes along the loan at a specific percentage rate, which may differ from one bank to another.
Title insurance:
Another closing cost is the title insurance. It safeguards the home purchaser and lender (bank) against any dispute. Title insurance is paid once in the form of a fee.
Appraisal fee:
This fee is paid to an appraiser who evaluates the residential flat’s value. The appraiser makes sure that the property’s price is as per the market price and lender’s needs.
Home inspection:
This fee is levied when a professional inspector comes to assess the condition of the home you plan to buy. The inspector asses
Stamp duty and registration fee:
Stamp duty and registration fee are closing costs that buyers need to pay. It is paid during the property registration and the rates vary from one state to another in India.
Attorney or lawyer charges:
When you buy residential flats in Lucknow or anywhere, it’s important to hire a lawyer for legal paperwork. The charges you pay to them also falls under the closing costs. The lawyer can help draft the sale deed, handle legal process, and ensure a smooth registration process.
Tips to reduce closing costs
Closing costs do not change, however, you can lower the overall cost by considering the following tips.
Negotiate with the Real Estate Company or seller
You can negotiate with the seller to keep costs lower. This tip will work in an area where property demands are lower. Ensure to check the market as well. Timing matters, too. If you plan to purchase a property where buyers are few but properties are many, you can bag some bargains.
Choose a loan with lower processing charges
Processing fees on home loans vary from bank to bank. So, it’s wise to get quotes from your desired financial institutions first, compare them, and choose the one with the lowest processing fee.
Leverage government schemes and subsidies
There are many schemes and subsidy benefits launched by the Indian government. You can leverage these schemes to lower the cost.
Conclusion
The process of home buying involves the closing costs that no home-buyers should ignore. These costs are essential and knowing them beforehand may help you plan things accordingly. You can always check with a professional to know about these fees and charges.
