Closing costs or closing fees are associated with the closing of a real estate transaction. When you buy a home, it can be a little overwhelming when you see all the fees that you have to pay. Below is a list of the various fees that can show up on a settlement statement.
Appraisal Fee: Approximately $350-500 depending on the type of mortgage and the amount of the loan. Depending on the lender, this could be paid at the time it is ordered or at closing.
Assuming an Existing Loan: Buyer would pay at closing any interest due for the rest of the month of closing, based on the daily interest charges.
Brokers Fee: This is paid by the seller of the home.
Certificate of Taxes Due: $10.00 charged to either the Buyer or Seller, depending on the type of mortgage applied for – due at closing.
Closing Fee: Charges from the title company for providing the closing and settlement services of the real estate transaction. Generally $250-350 and is usually paid by sharing the cost between both the Buyer and Seller and is due at closing.
Condo Escrow Fee: Usually two months Homeowners Association dues or monthly maintenance fees are paid in advance to keep the reserves at a high balance in case of needed repairs. Charged to buyer at closing.
Credit Report: Usually $65-75 per person. A report on the buyers credit to determine their ability to repay a loan – ordered by the lender and generally due at time report is ordered.
Discount Fee or Points: Discount points are purchased to buy down the interest rate on the loan to lower the monthly payments. One point is equal to 1% on the loan interest rate. This is due at closing. With VA loans, someone other than the buyer must pay points, so the Seller typically pays points on this type of financing. With FHA and Conventional loans, points can be negotiated between the Buyer and Seller.
Document Preparation Fee: Usually $100-200 and can be on all types of loans – due at closing.
Documentary Fee: This is one cent per hundred dollars of the purchase price and is due at closing.
Down Payment: This usually depends on the type of loan applied for and is due at closing. Any earnest monies paid are deducted from this amount due at closing.
Earnest Monies: A pledge of interest in the property given to the Seller as a partial down payment and is given along with the contract to purchase. It is generally equal to 2-10% of the purchase price.
Funding Fees: Usually applies to VA loans only and is equal to 1% of the loan amount, due at closing.
Hazard Insurance: One year is due in advance and charged at closing. Contact your insurance agent for rates specific to your new home.
Hazard Insurance Escrow: Two months required in advance at closing. This is escrowed in your account with the lender.
Inspection Fee: Done by an engineer or Home Inspection Service and is usually $275-$500 depending on the house size, construction, location and purchase price. This is due at time of inspection.
Interest Proration: A daily charge on the interest portion of the monthly mortgage payment multiplied by the number of days of ownership during the month of closing.
Loan Service Fee or Origination Fee: Usually 1% of the loan amount charged for making the loan available and for the work involved in processing the loan – due at closing.
Loan Transfer Fee: Only applies if you are assuming an existing loan and is due at closing. Usually $500 for FHA or VA assumed loans and can be up to 3% of the existing loan balance on a Conventional loan.
Mortgagees Title Policy: Usually a $200 to $500 fee to insure the lender under a deed of trust against loss caused by an invalid title or loss of priority in recording the mortgage. Additional coverage could be added to the mortgagee’s policy depending on the mortgage and the lender. Check with your lender for charges.
Mortgage Insurance Premium (MIP) or Private Mortgage Insurance (PMI): This is a percentage amount of the loan charged up front and added back into the loan amount or can be paid at closing. There is an additional percentage charged and added to the monthly payments –FHA amounts are generally ½ of 1% divided by 12 and added to the monthly payment. Check with your lender for percentages applicable to your loan. MIP is usually applicable to all loans (excluding VA) when less than 20% is put down.
Mortgage Insurance Escrow: Usually two months of the portion of your monthly MIP, paid in advance and due at closing.
Recording Fees: $5 per page, due at closing. Deed used for transferring ownership only is usually one page. Deed of trust for a fixed rate loan is usually 4-7 pages and for an adjustable loan is usually 6-20 pages.
Rents: Are prorated based on the agreement between the Buyer and Seller and due at closing or prior to occupancy.
Special Taxes: Any special assessment charges attached to the property. Generally prorated to closing and due at closing.
Improvement Location Certificate or Survey: Survey is usually $200-400 depending on the type of home and type of survey requested. An Improvement Location Certificate is usually $80-100 and includes diagrams showing the lot measurement, boundaries, building location and any easements. Due at closing.
Tax Reserve or Tax Escrowed: Two months worth of taxes escrowed in advance by the lender to pay for the Real Estate Taxes. Lenders may vary on the reserve requirement from 2 to 12 months depending on the time of year of the closing. Due at closing.
Tax Service Fee: Usually $35-70 and paid by the seller. This verifies that the taxes are being paid annually, for the lenders protection and is due at closing.
Title Insurance Fee: Charged to the Seller to give the Buyer protection in his interest in the real property. Due at closing.
VA Funding Fee: Usually 3% of the loan amount added to the VA loan and financed into the loan payments.
It is important to always consult a qualified mortgage lender and obtain an accurate good faith estimate of closing costs when considering a mortgage loan.
Until next time,
Marianne Bandy, Team Leader
The Bandy Team
Keller Williams Park Meadows
720-466-3790
