What costs should I expect at the loan closing?
At the loan closing, you will be required to pay your down payment and other various closing costs and fees. Most of the closing costs are paid by the buyer, but some of the fees are prorated, by date, to the seller and the buyer.
At times, fees such as the credit report fee, or the appraisal fee may be required with the loan application before the closing. Certain fees vary from lender to lender, but generally, taxes, appraisals, credit reports and title insurance should be comparable for all borrowers. Sometimes, your fees may be included in the mortgage amount, depending on the terms negotiated. But generally, the buyer comes prepared to pay the related fees at the time of the loan closing. Common closing costs and fees that you may expect are:
Loan Origination Fee
A percentage of the mortgage, charged to set up, evaluate and assist throughout the process of creating a loan. Among that process is pulling a credit report which costs money, this leads us to the credit report fee.
Credit Report Fee
Requested by the lender in order to evaluate your loan application (obtained from one of three major credit reporting agencies: Equifax, Experian, TransUnion).
Appraisers require payment in order to appraise the property you’re interested in buying. The appraisal is a factor in determining the amount the lender will loan. The appraisal is necessary almost every single time, very few homes qualify for an appraisal waiver. Appraisals determine the value of the home and usually are the slowest part of the loan process.
May be required – verifies the legal position of the home on the property and ensures that there has been no encroachment on the property.
Recording or Transfer Fees
A small fee charged to cover the paperwork to record the home purchase and transfer ownership.
Interest from the closing date to the end of the month generally charged to the buyer
Property Taxes: buyer’s prorated portion of state and local government property taxes already paid by the seller (such as annually paid taxes).
Escrow Account Payments
Charges to cover costs or payments which will be due after the closing. Borrowers set up escrow accounts which help save money monthly in order to pay for taxes, insurance and other one fees of home-ownership.
There are many different kinds of closing costs and depending on you and the home you’re purchasing or refinancing they may not be applicable. Reach out to me and I can help explain this and more! Check out our article on what to look for in an excellent real estate agent!