Whether you’re pre-approved to buy a home, considering a home purchase, or contemplating a refinance, you’ll want to prepare yourself for the various costs at closing.
So, what are closing costs? Before you seal the deal, you’ll receive a Loan Estimate and Closing Disclosure – both are required to be provided by your lender. These documents were intended to be user-friendly, but they can be overwhelming and confusing. After reading this article, you’ll be well-versed on each itemized fee.
The total that you’ll pay at closing will vary based on purchase price, property location, loan type, down payment, previous homeownership, and occupancy. Below we’ve outlined the closing costs that will be itemized on your Loan Estimate and Closing Disclosure.
- Appraisal fee: the cost of a licensed appraiser’s unbiased professional opinion on the value of the land and home
- Home inspection: the cost of a licensed home inspector’s unbiased professional opinion on the home’s condition (Do we want this…if so, should we add other inspections?)
- Application, underwriting, or processing fee: an upfront fee for the processing of a new loan
- Attorney’s fees: fee charged by the title company for either the title attorney’s review of title work, or the title attorney’s fee for conducting a settlement
- Prepaid interest: the amount of interest accrued between the funding of your loan and the end of your closing month
- Loan origination fee: an upfront fee for the origination of a loan
- Points: fee paid to reduce the interest rate on a loan
- Mortgage broker fee: fee charged by mortgage broker for gathering documentation needed for lender
Mortgage insurance fees:
- Upfront mortgage insurance: upfront fee to insure a loan; this protects a lender if the borrower doesn’t meet the terms of mortgage repayment
- FHA, VA and USDA fees: the same as upfront mortgage insurance, but more specific to government-backed loans
Property taxes and insurance
- Annual assessments: fees charged by local jurisdictions – sometimes in the form of a homeowner’s association fee
- Homeowners insurance premium: the amount charged by the homeowner’s insurance agency to insure your home
- Property taxes: the amount charged by the local government the home’s jurisdiction falls within
If you’ve made it this far in the article – good! We’ve thrown a lot of information at you in a short period of time. Rest assured that our team will guide you through the home buying process. We’ll educate you through each step, consider your best interests, and answer any questions you have along the way. Our team is looking forward to working with you! Ready to speak with a loan officer? Reach out to our team to start your home buying process. 443.722.1680