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Buyer Closing Costs

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Closing costs will vary from one buyer to the next. Depending on the circumstances, there may be additional costs that are required by lenders or government. The cost of the loan will vary depending on your location, which lender you use and what type you choose.

Your Closing Disclosure will be given to you at least three days before your closing meeting. This document will detail all closing costs you have to pay and the amount you owe. These are some of the common closing costs that you may see in your disclosure.

Closing Costs For Home Buyers

  • Application Fee

    To process your loan request, some lenders may charge an application fee. The fee can vary from lender to lender, but it can reach $500. This fee can be used to pay a down payment or as a separate fee. Even if your application is rejected, the application fee cannot be refunded.

  • Appraisal

    An appraisal will be ordered by your lender through a third-party appraisal management company. This will send a professional appraiser out to your home to assess the value of your property. The appraiser will also perform basic safety checks to ensure that the property is ready for occupancy. Appraisals are crucial because they determine the amount of money lenders will allow you to borrow to purchase a property. This ensures that you don't pay too much for a property. Appraisal fees typically range from $300 to $600.

  • Attorney Fees

    You can't close a loan on your home without an attorney in some states. The cost of hiring a real property attorney to coordinate your closing and prepare paperwork for your title transfer are covered by attorney fees. The cost of a real estate attorney depends on the state and local rates.

  • Closing Fees

    The escrow company, attorney or person who conducted your closing meeting receives the closing fee. Every closing must be signed off by an attorney in certain states. The costs of closings vary depending on the state you live in and whether or not an attorney is required to attend.

  • Courier Fee

    Transport costs for mortgage documents are covered by courier fees. If your lender charges them, expect to pay $30 for courier fees.

  • Credit Reporting Fee

    Credit reporting fees pay for the cost of pulling your credit reports and looking at credit scores. Credit reporting fees average $25.

  • Get Discount Points

    Lenders will allow you to pay upfront for your loan in order to lower your interest rate. You can also buy discount point (basically, buying down your interest rate to save interest over the term of the loan). One discount point equals one percent of the loan amount.

  • One point would cost $1,000 if you have a $100,000 mortgage. A point will cost you $2,000. For a loan of $200,000, it costs $1,000. Discount points are not mandatory, unlike other fees.

     

    Any discount points fees will be included in your Loan Estimate under Origination Fees.

  • Escrow Funds

    Sometimes called reserve fees, prepaid or escrow funds are reserved money for property taxes and premiums. Your lender will keep your escrow funds in an account. The lender will then use the escrow funds for payments to you as part of your regular mortgage payments.Your lender may require that you pay a set amount of monthly expenses to an escrow account at closing. Although the exact number of months will depend on your lender's policy, most buyers pay 2 months worth of expenses at the closing.

  • FHA Mortgage Insurance

    You will need to pay a mortgage premium upfront if you get an FHA loan. Current MIP rates are 1.75% of the base loan amount.

    If you borrow $100,000 to purchase your home, your closing MIP is $1,750. This upfront payment is separate to your monthly MIP. It ranges between 0.45% - 1.5% of the loan value.

  • Flood Certification

  • A flood certificate may be required if your home is located in a floodplain. The Federal Emergency Management Agency receives this money to help them plan for emergency situations and target high-risk areas. If you are buying a house within a flood area, this closing cost will not apply.

  • Transfer Fee For Homeowners Association

    The homeowners association transfer fee covers the cost to move the HOA fees from the seller and to the buyer. This fee ensures that the seller has paid their HOA dues. You will also receive a copy of the payment schedule and dues schedule of the association, as well as their financial statements.

    Usually, the seller will cover this cost. If you are buying in a highly competitive market or agree to pay all closing costs, however, you may need to pay your own transfer fee.

    Your HOA policies will determine the amount you pay for your transfer. This fee is not payable if you live in an HOA-free area.

  • Homeowners Insurance

    Homeowners Insurance provides protection to cover your losses if your house is damaged. To cover any damage, most mortgage lenders will require homeowners insurance to be included in your loan. You can also get protection for your home's contents and liability coverage in the event of an injury to your property.

    A lot of lenders will require that you pay for one year's worth homeowners insurance when you close. For every $100,000 in home worth, you can expect to pay $35 per month.

  • Charges for Loan Origination

    The origination fee for a loan covers the cost of processing your loan and underwriting it. This fee is paid to your lender for the underwriting of your loan and the creation of your loan paperwork. Origination fees will cost you about 1% of the loan's total value. This will be added to the mortgage discount points and shown under Origination Fees in your Loan Estimate.

  • Lender's Title Insurance

    The lender's insurance covers title damage and reimburses the bank. You only have to pay the lender's title insurance once, unlike other types of insurance.

    The lender's insurance on the title is different from the owner's. Lender's insurance could cost as much as $875.

  • Lead-Based Paint Inspection

    Lead paint might be present in homes built before 1979. Children and adults living in homes with lead-based paint are at significant risk of developing serious health problems.

    This fee covers the cost of a lead test in your home. A lead-based paint inspection will cost you around $300

  • Insurance on Owner's Title

    Title insurance can be optional but can provide coverage in many situations. If a former owner of your property files a lawsuit against the buyer, a title insurance company will protect you.

    Let's suppose, for example, that a lien is discovered on the title 10 years later. The title insurer will pay you the amount of your policy. Title insurance costs between 0.5% and 1% of the purchase price.

  • Pest Inspection Fee

    Before you can close on a loan in certain states, you will need to have a pest inspector. If you are buying a house with a VA loan, pest inspections may be required. It might also be required for other loans depending on the state law or whether an appraiser believes there are problems.

    An average pest inspection will cost around $100. This may depend on the specific situation and be covered by the seller, buyer or lender.

  • Prepaid Daily Interest Charges

    The lender may ask you to pay any interest accruing on your loan between closing date and the due date of your first mortgage payment. The amount of interest that you will accrue is dependent on the amount of your loan and your interest rate, as well as your closing dates.

  • Private Mortgage Insurance

    If you pay less than 20% at closing on a conventional loan, your lender will require PMI. If you default on your loan, PMI protects your lender.

    You might be asked by your lender to pay the first month's PMI premium at closing. Your lender will determine the exact amount of PMI you pay. Most homeowners pay between $30 and $70 per month for each $100,000 borrowed.

    A conventional loan allows you to pay part or all of the PMI policy upfront at closing. This will allow you to pay lower or no monthly mortgage insurance fees.

    FHA loans come with an upfront mortgage insurance premium and a monthly MIP fee. This is unless you pay a 10% down payment. MIP is eliminated in this case after 11 years. USDA loans come with an upfront guarantee and an annual guarantee fee. These fees function in the same way as PMI/MIP.

  • Property Tax

    Property taxes Fees you pay to your local governments in exchange for accessing public services. Property taxes are used to fund public schools, roads, and fire departments. The location you live and the value of your home will determine how much you pay in property taxes.

    You might be required by your lender to pay property tax dues up to one year after closing. Your appraisal value and public records can be used to estimate your property taxes.

  • Rate Lock Fee

    You might be charged a fee by some lenders to lock in your interest rates between closing and preapproval. Locking in your rate will usually cost you between 0.25% and 0.50% of the loan amount. This service is offered by many lenders for no cost.

  • Recording Fee

    To update public land ownership records, a recording fee must be paid to the local county or city government. This will cost you approximately $125.

  • Survey Fee

    You may need a survey in some states before you can sell your home. The survey company will verify and confirm your property lines before you close.

    Your land survey will cost you $300 to $950. If you are buying a large property with unusual boundaries, or if it is very large, you may be charged more.

  • Tax Monitoring and Tax Status Research Fees

    This includes the cost of hiring an expert to verify your property taxes have been calculated correctly. If you have missed any property taxes, the company will notify your lender. The amount of the fee will depend on where you live, and which lender you use.

  • Title Search Fees

    Title searches search for claims on the property that you are interested in buying. Liens, bankruptcies and unpaid taxes could indicate that the seller does not technically own the property they are selling.

    Title insurance companies do the title search in most states. However, laws in some states require that real estate lawyers handle title searches in other areas. You can expect to pay between $200 and $400 for your title search.

  • Transfer Tax

    Transfer taxes are paid to your local government to update your home's title or transfer it to you. This fee, like many other local taxes will differ depending on where you live.

  • Underwriting Fee

    In exchange for verifying your loan paperwork, your underwriting fees go to your lender. Underwriting fees can cost you up to $795.

  • VA Funding Fee

    If you purchase a house with a VA loan, you will need to pay a VA financing fee at closing. The VA funding fee is used to cover administrative costs associated with the VA loan program. The funding fee will be determined by the amount of down payment, whether you are purchasing or refinancing and whether or not it is your first or second use of VA benefits.

    If you pay less than 5% down on your first VA loan, the VA funding fee equals 2.3% of the total loan value. 3.6% for subsequent uses. Your fee will be 1.65% if you pay a 5% downpayment, while a 10% downpayment will lower your fee by 1.4%. These two fees are the same, regardless of whether you're doing it for the first time or 10th time.

    Refinances from other types of loans into VA loans are subject to a 2.3% funding fee if you're the first user and 3.6% for each subsequent use. VA Streamlines, also known as Interest Rate Reduction Loans (or IRRRLs), have a 0.5% financing fee.

    If you are applying for VA disability, or as the surviving spouse of a veteran who has died in service or from a service-related disability, the funding fee may be waived. You are exempt if you're a Purple Heart recipient who is serving in active duty.

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