Recasting or making a lump sum payment on your mortgage loan has its advantages and disadvantages. But there are certain instances where making a lump sum payment on your mortgage just makes sense.
Summary: Buying a home in Oregon comes with more costs than just the mortgage itself. There are closing costs that need to be paid as well. This article will outline what these costs are and how much you can expect to pay in closing costs when you purchase a home.
Buying a home in Oregon comes with a number of costs in addition to a mortgage. Not only will you need to make your mortgage payments as soon as you take possession of your new home, but there are certain closing costs that will need to be paid upfront. As such, it’s important for Oregon homebuyers to budget for these closing costs when they buy a new home anywhere in the state.
On average, home buyers in Oregon pay closing costs ranging from 2% to 5% of the purchase price. This is a ballpark figure. Many lenders will require that you apply for a loan prior to receiving a more precise estimate of closing costs; however, there are some lenders that are more transparent with their available options.
Key factors in determining the closing costs you will pay include the loan program, credit scores, down payment, property type and occupancy. As such, your closing costs could be on their lower or upper end of the cost spectrum depending on your exact scenario. Find current rates and costs specific to your situation through the link below.
Let’s take a closer look at the typical closing costs paid by Oregon home buyers.
What’s Included Within My Closing Costs?
“Closing costs” is a collective term for the various fees and charges you’ll encounter when buying a home. Some of these fees come from the lender. Others come from third parties that are involved in the transaction, like home appraisers and title companies.
The types of closing costs you pay will depend on the kind of loan you’re using, as well as other factors.
Typical closing costs for Oregon home buyers include:
- Fees relating to credit report acquisition.
- Mortgage origination fee for processing loan paperwork.
- Attorney’s fees (in some cases).
- Discount points, which can be used to secure a lower mortgage rate.
- Home appraisal fees (though sometimes they’re paid in advance).
- Property survey to verify property lines, rule out encroachment, etc.
- Title search and insurance fees, to cover both the lender and the home buyer.
- Escrow deposit (in some cases) to cover the first two months’ property taxes.
- Recording fee paid to the city or county for recording the new land records.
- Underwriting fee, which covers the cost of evaluating the loan.
Related: Oregon mortgage loan options
Again, these are just some of the typical closing costs for Oregon home buyers. Depending on your situation, you might encounter additional costs that are not on this list. Some of these fees might not apply to your situation.
Average Home Buyer Closing Costs in Oregon
As mentioned at the start of this article, Oregon home buyer closing costs tend to average between 2% and 5% of the purchase price. This gives you a general idea of how much you might pay when buying a home in Oregon.
So, if you’re buying a house that costs $200,000, your closing costs might fall between $4,000 and $10,000 (on average). That’s a pretty wide range, so it’s not something you can use for planning purposes. That’s where the Loan Estimate comes into the picture.
Related: Home prices in Washington vs. Oregon
Soon after you apply for a mortgage loan, the lender will give you a document known as a Loan Estimate. This standardized, three-page document gives you a lot of important information about your loan, and has recently replaced the Good Faith Estimate. Your lender is required by law to provide this document to you so that you can get an accurate idea of exactly how much your home purchase will cost you. Page 1 includes your loan amount, mortgage rate, and estimated monthly payments, as well as an estimate of your total closing costs. Page 2 provides an itemized breakdown of the various costs associated with your loan.
Discount Points and Lender Credits
Discount points – also referred to as mortgage points – are fees that are paid directly to the lender when a real estate transaction closes in exchange for a lower interest rate. Many also call this tactic “buying down the rate.” With a lower interest rate, you can effectively lower your mortgage payments. One discount point costs 1% of the mortgage amount, or $1,000 for every $100,000.
These factors can affect the amount paid at closing. For instance, consider the different scenarios below:
- Borrower ‘A’ might decide to pay mortgage discount points in exchange for a lower interest rate.
- Borrower ‘B’ might avoid paying points in order to reduce the upfront costs.
- Borrower ‘C’ might forego the discount points and opt for a slightly higher rate, in order to get a lender credit to further reduce closing costs.
These choices could result in a difference of several thousand dollars in the amount these buyers pay to close their loans. Not only can borrowers get a reduced interest rate for buying discount points, but they may also be able to have these points tax-deducted, much like the interest paid with each mortgage payment.
It should be noted, however, that it can take a long time for the savings to accumulate. Your lender will be able to do the calculations for you to show you how much you’ll save over the life of your mortgage, which will differ depending on whether you go with a short- or long-term.
Disclaimer: This article includes average closing costs for home buyers in Oregon. It is based on surveys conducted by Bankrate and other third-party data, which are deemed reliable but not guaranteed. Your closing costs could differ from the examples provided above, based on a number of factors.
In Need of a Loan in Oregon?
Do you need mortgage financing to buy a home in Oregon? We can help. Sammamish Mortgage has been serving buyers across the Pacific Northwest for 28 years. We serve all of Washington, Oregon, Idaho, and Colorado and offer many mortgage programs. Get in touch with Sammamish Mortgage today to get started.