Listed below are some typical closing costs that you may incur as part of your transaction. When you apply for a loan, you will receive a “good-faith estimate” of closing costs and settlement charges, along with a booklet that will explain these costs.
This is a one-time fee. The appraisal is made by an independent fee appraiser.
Credit Report Fee
A one-time fee that covers the cost of the credit report.
Document Preparation Fee
There may be a separate fee that covers the preparation of the final legal documents.
A one-time fee used to adjust the yield on the loan to what market conditions demand. It is often called “points.”
Loan Origination Fee
The lender’s administrative costs in processing the loan are covered by this fee.
You might be required to pay an upfront fee for mortgage insurance, depending on the amount of your down payment. Lenders may also require monies be placed into a reserve account held by them.
Depending on the time of month your loan closes, this per-diem charge may vary from a full month’s interest to that of a few days. If your loan closes at the end of the month, you may pay interest for only a day or so.
Taxes and Hazard Insurance
You may be required to reimburse the seller for property taxes, prorated depending on the month in which you close. You will also need to pay a year’s hazard insurance premium up front. Also, you might be required to put a certain amount for taxes and insurance into a special reserve account held by the lender.
Title and Escrow Fees
Generally, each party is responsible for cost or fees incurred on their behalf unless otherwise negotiated. Some common exceptions include title policy and escrow fees, city and county transfer fees, and real estate commissions. Please refer to your real estate professional for prevailing customs in the area.