Closing Costs

Closing Costs . . .

There's no question that buying a home is a significant investment, both emotionally and financially. Not only are you choosing your dwelling place, you are most likely investing a large portion of your assets into this venture. The more prepared you are at the outset, the less overwhelming and chaotic the buying process will be. My goal is to assist you in making an intelligent and informed decision. Remember, if you have any questions about the process call me. If I don’t have the answer, mortgage loan officers and escrow agents I’m in daily contact are a great resource.

On the day you actually buy your new home (called “closing” or “closing the escrow”), in addition to your down payment, pre-paid property taxes and a one-year premium for homeowners insurance, you'll need some cash for various fees associated with the purchase. These expenses are known as closing costs and are paid by both buyers and sellers. The Real Estate Settlement Procedures Act (RESPA) requires that costs be enumerated in a document called a HUD-1, where all costs associated with both sides of the transaction are listed.

Some closing costs are paid up-front when you apply for a mortgage loan, including money for a credit check on all applicants ($50-75) and for an appraisal on the property ($250-400). Even if you don't ultimately receive the loan, that money is not refundable.
Other closing costs are possible and should be considered when evaluating your finances. These may include, but are not limited to:
 

• Title examination (approx. $325-400)
• Title examination (approx. $325-400)
• Survey charge (approx. $125)
• Flood certificate (approx. $25)
• Loan origination fee                                      (point = 1% of mortgage amount)
• Escrow fee (approx. $250-325)
• Document preparation fees (approx. $350)
• Transfer, recording, tax and other fees        (approx. $125)
• Miscellaneous other fees (up to $300-400)
• Interest on the mortgage (first full payment will be a full month later)
• Points (if your mortgage requires) – up-front interest paid in return for a lower interest rate (not all loans have points). Each point is one percent of the loan amount. Sometimes sellers will assist with some or all points.

The good news is that there are so many loan programs available that if you have a good credit score and qualify for the mortgage amount but your cash is limited, you can apply for zero down, 3% down and some mortgage plans even allow the seller to pay some or all of your closing costs (such as title insurance, escrow fees, and points). Depending on the condition of the home, certain closing costs can sometimes be added to the amount of mortgage loan you're receiving. This can be done only if the home will appraise for at least the loan amount.