Can You Borrow Money for Closing Costs on a Home?
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Can You Use a Personal Loan to Pay for Closing Costs?
Advantages of Using a Personal Loan for Closing Costs
Disadvantages of Using a Personal Loan for Closing Costs
4 Things to Look For When Using a Personal Loan for Closing Costs
1. Interest Rate
2. Loan Amount
3. Repayment Terms
What Are Some Fees Associated With Closing Costs?
Attorney fees. Attorney fees could be payable at the closing table if you hire an attorney that helps you navigate through the mortgage closing process. Discount points. Homebuyers can pay discount points at the closing table to get a lower interest rate on the mortgage. Government fees and taxes. Closing costs may include certain fees or taxes to a municipal or county government, including recording fees. Origination fees. The lender may charge origination fees for processing your mortgage loan application. Prepaid fees. These upfront costs at the closing table can include the initial payments for your homeowner’s insurance, mortgage insurance, and escrow fees. Service charges. The lender may charge fees to cover the cost of certain services, including appraisals, credit reports, pest inspections, land surveys, flood determination services, and title searches. Underwriting fees. The lender may charge underwriting fees for evaluating the risk of lending money to you.
When Does It Make Sense To Take Out a Personal Loan for Closing Costs?
Applying for a Personal Loan for Closing Costs
Alternatives to Personal Loans for Financing Closing Costs
Down payment assistance programs. Look into down payment assistance programs on the Housing and Urban Development (HUD) website. You can search hundreds of programs by state, but keep in mind that most apply to first-time homebuyers only. Borrow from a family member. Some lenders allow you to borrow money from friends or family members to cover the cost of closing. Make sure to check with your lender prior to making this arrangement. Use your tax refund. If you have a refund coming in, putting it toward your down payment or your closing costs is a great way to make use of the refund. Borrow from your 401(k). This is not always recommended, but it could be your best option. Make sure to weigh the pros and cons of borrowing against your retirement account before pulling the trigger.
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