|
Real
Estate Information for Buyers:
Closing
Costs |
|
Closing
Costs
At closing, there are two categories of costs:
-
Non-recurring
closing costs—items that are paid once and
you never pay again.
-
Recurring
closing costs—items you pay time and again
over the course of home ownership, such as property
taxes and homeowner's insurance.
Non-Recurring
Closing Costs
Points - Points,
or your Loan Origination Fee, is
equal to one percent of the mortgage
loan.
Discount
Points -
Any points in
addition to the
loan origination
fee are called "discount
points." On
a conventional
loan, discount
points are usually
lumped in with
the loan origination
fee.
Appraisal
Fee -
Your property is your collateral
for the mortgage, so lenders
want to be reasonably certain
of the value and require
an appraisal. Appraisal fees
vary.
Credit
Report -
Required
by your mortgage
lender. Fees
vary.
Lender's
Inspection
Fee -
Required
by
your
mortgage
lender
if
you’re
buying
a
new
home.
Fees
vary.
Mortgage
Broker Fee -
Applies only if
you work with a
mortgage broker.
Fees vary.
Tax
Service
Fee -
Required
by
your
mortgage
lender.
Fees
vary.
Flood
Certification
Fee -
Required
by
your
mortgage
lender.
Fees
vary.
Flood
Monitoring -
Required
by
your
mortgage
lender.
Fees
vary.
Other
Lender
Fees -
Required
by
your
mortgage
lender.
Fees
generate
income
for
the
lenders
and
are
used
to
offset
the
fixed
costs
of
loan
origination.
Costs
vary.
Document
Preparation -
Required
by
your
mortgage
lender.
Fees
vary.
Underwriting
Fee -
Required
by
your
mortgage
lender.
Fees
vary.
Administration
Fee -
Required
by
your
mortgage
lender.
Fees
vary.
Appraisal
Review
Fee -
Sometimes
required
by
your
mortgage
lender.
Fees
vary.
Warehousing
Fee -
Rarely
required
by
your
mortgage
lender.
Fees
vary.
Items Required To Be Paid In Advance
Pre-paid Interest - Since mortgage loans are
usually due on the first of each month, this fee is based on
the number of days the closing takes place prior to the first
of the following month.
Homeowner's Insurance -
Typically, you will pay the first year in
advance. fees vary.
VA Funding Fee -
The Veterans Administration
sometimes charges a fee
for guaranteeing your loan.
Fees are normally added
to the balance of the loan.
Up
Front
Mortgage
Insurance
Premium
(UFMIP) -
This
is charged
on FHA
purchases
of single
family
residences
(SFR's)
or Planned
Unit
Developments
(PUDs)
and is
2.25%
of the
loan
balance.
Like
the VA
Funding
Fee it
is normally
added
to the
balance
of the
loan.
Mortgage
Insurance
or
PMI -
Most
mortgage
insurance
(if
required)
is
paid
monthly
with
your
mortgage
payment.
PMI
covers
the
lender
and
a
portion
of
the
losses
in
cases
where
borrowers
default
on
their
loans.
Reserves
Deposited with
Lender -
The lender's goal
is to always have
sufficient funds
to pay your bills
as they come due.
Here, if you make
a minimum down
payment, you may
be required to
deposit funds into
an impound account
to make the payments
on your homeowner's
insurance, property
taxes, and mortgage
insurance. Impound
accounts are sometimes
referred to as
escrow accounts.
Homeowners
Insurance
Impounds -
Since
a
lender
is
allowed
to
keep
two
months
of
reserves
in
your
account,
you
will
have
to
deposit
two
months
into
the
impound
account
to
start
it
up.
Property
Tax
Impounds -
Here,
the
amount
varies
depending
on
when
your
closing
takes
place.
Fees
vary.
Mortgage
Insurance
Impounds -
Most
lenders
ask
that
you
may
put
at
least
one,
possibly,
two
months
worth
of
mortgage
insurance
as
an
initial
deposit
into
your
impound
account.
Non-Recurring
Closing
Costs
Not
Associated
With
The
Lender
Closing/Escrow/Settlement
Fee -
Methods
and
fees
vary.
Title
Insurance -
Title
Insurance
costs
vary
depending
on
whether
you
are
purchasing
a
home
or
refinancing
a
home.
The
title
insurance
exists
to
protect
you
from
any
claims
that
could
be
brought
against
the
property
you’re
buying.
The
title
insurance
gives
you
a
guarantee,
that
once
you
have
bought
your
home
you
own
it,
or
else,
the
title
company
must
compensate
you
for
damages.
Notary
Fees -
Loan
documents
have
two
or
three
forms
that
must
be
notarized.
Fees
vary.
Recording
Fees -
Certain
documents
get
recorded
with
your
local
county
recorder.
Fees
vary.
Pest
Inspection
or
Termite
Inspection -
Typically
paid
by
the
seller
of
the
home.
Home
Inspection -
Optional
item.
Home
Warranty -
Optional
item.
back
to top
|
|