The closing cost is the fees you pay people involved in putting your paper work together. The fees can go up to $12000 and depends on the value of the house. Most times you can get the seller to assist with a significant portion of the closing cost.
Oh my goodness. Is this just for the paperwork? What kind of paperwork is there? Does the paperwork include taxes, too?
The way it works in Finland is that most sellers hire an estate agent (realtor or real estate agent in American) whose fee is usually a percentage of the realized selling price. It is normally between two and six percent depending on the agent and general market conditions. The agent not only does the marketing but all of the paperwork, too. Whatever paperwork needs to be done for the government, is done for a fee measured in a few hundred euros at most. There is such a thing as stamp tax, however, that the buyer pays. For properties, the stamp tax is four percent of the selling price, and for shares of a housing corporation it is two percent of the selling price.
Next is the credit score benefit. A lot of people don't have a stellar score, this comes in handy. Since NACA provides the loan, they ensure that you can afford it despite what your credit score might say.
Finland has as a similar program, too. First-time home buyers may qualify for a government guarantee on the loan and a reduced interest rate. The reduction, however, has been rendered meaningless by the very low interest rates the banks offer these days. For example, our mortgage has a total interest rate of about one percent including the reference interest rate (Euribor 360) and the customer specific margin.
Sound like you guys have a less costly time buying homes in Finland. Some people pay higher closing cost, but like I said most sellers cover the majority of the closing cost which is part of the negotiating process.