Closing Costs

Don’t forget to factor in closing costs when considering a home sale or purchase. When purchasing a home you will get a “Good Faith Estimate” (GFE) of closing costs within three days of submitting your loan application. This estimate is based on the lender’s prior experience and its accuracy is required to be within a range so you’re not surprised when you come to closing. we will be glad to review the GFE with you, answering any of your questions. Below are some of the closing costs you may expect.

Mortgage Related Closing costs

• Points – An option for the home buyer is to pay points to lower the interest rate. Each point equals 1% of the mortgage amount. For example: on a $250,000 loan, 1 point would equal $2,500 (this is not a required fee).

• Appraisal Fee-The fee for having the house appraised may be incorporated into the closing costs some lenders require the payment at the time the loan application is submitted.

• Credit Report-The lender uses a credit report to determine the credit worthiness of the applicant.

• Interest Payment-Typically the buyer is required to pay interest on the mortgage loan to cover the time between the closing date and when the first mortgage payment period begins. For example: If closing is on June 15. Your first monthly payment begins to accrue interest on July 1 with your first mortgage payment due August 1. At closing an interest payment covering the accrual period between June 15 and June 30 may be required.

• Escrow Account-At closing, a payment may be required to fund the escrow account. If the lender is paying home insurance, property taxes and/or other expenses out of the escrow account.

• Loan Origination Fee- These cover administrative expenses with setting-up and processing the loan. The loan origination fee may be a percentage of the mortgage amount.

Taxes collected at closing

• Property Taxes-This is the one closing cost that is often prorated between the buyer and seller. If the seller has already paid the annual property taxes, the buyer typically reimburses the seller for the period in which the buyer will be occupying the property. Likewise, if the taxes have not yet been paid, the seller typically reimburses the buyer for the period in which the seller occupied the property.

• Transfer Taxes and Recording Fees-This is the cost for transferring ownership of the property and recording the purchase documents. The fee is often calculated as a percentage of the sales price.

Fees that are often due

• Homeowners Insurance-Insurance that is required by your lender to compensation for damage, loss, or injury of property, personal belongings, or persons due to fire, theft, accidents, etc.

• Title Insurance-Insurance that covers if there is a cloud on the title that may come up at some time after the purchase of your home. This will protect from unknown liens on the property.