There are certain standard costs associated with closing the sale of a house. These fees are split between the buyer and the seller, as spelled out in the sales contract.
Negotiating an offer not only includes getting you the best price, but also limiting your closing costs. Ultimately that means more money in your pocket! I will walk you through the closing costs, answering any questions you may have explaining which costs are decreed by law to be yours and which are negotiable.
Good Faith Estimate
Buyers will receive a "Good Faith Estimate" of closing costs at the time the loan application is submitted to the lender. The estimate is based on the loan officer's past experience and may not include all the closing costs. I will be glad to review the "Good Faith Estimate," answering questions and highlighting missing costs and estimates I believe to be low.
Standard Closing Costs
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Loan-Related Costs
- Loan Origination Fee
- Points (optional)
- Appraisal Fee
- Credit Report
- Interest Payment
- Escrow Account
- Taxes
- Property Taxes
- Transfer Taxes and Recording Fees
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Insurance
- Homeowners Insurance
- Flood or Quake Insurance
- Private Mortgage Insurance (PMI)
- Title Insurance
Loan-Related Closing Costs
Loan Origination Fee
This covers the administrative expenses in setting-up and processing the loan. The loan origination fee may be a percentage of the mortgage amount.
Points (optional)
An option for the home buyer is to pay points to lower the interest rate at which the loan will be repaid. Each point equals 1 percent of the mortgage amount. For example: on a $150,000 loan, 1 point would equal $1,500.
Appraisal Fee
The fee for having the house appraised may be incorporated into the closing costs or payment may be required by the lender at the time the loan application is submitted.
Credit Report
The lender uses a credit report to determine the creditworthiness of the loan applicant. This fee is often paid when the loan application is submitted.
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 May 15. Your first monthly payment begins to accrue interest on June 1 with your first mortgage payment due July 1. At closing an interest payment covering the accrual period between May 15 and May 31 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.
