Closing costs are the total expenses that the buyer pays at the time a real estate transaction is completed. closing costs generally range between 3 and 6 percent of the home purchase price. With conventional loans, the following closing costs cannot be paid by the Seller for the Buyer: Pre-paid interest, Hazard insurance impounds, or Property tax impounds.
|Federal Housing Administration (FHA)|
An agency of the U.S. Department of Housing and Urban Development (HUD). It insures residential mortgage loans made by private lenders. FHA also sets standards for underwriting mortgages.
|Gross Monthly Income|
The total monthly income earned before taxes and any other deductions.
|Private Mortgage Insurance (PMI)|
In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment - as low as 3 percent in some cases. With down payments below 20%, borrowers are usually required to carry private mortgage insurance depending on your loan's structure. Private Mortgage Insurance, is paid on all non-government-insured loans and whose equity is less than 20%. When you have accumulated 20% in equity, your lender may waive PMI at your request. FHA and VA loans have different insurance and guidelines; see Mortgage Insurance Premium for FHA loans.