Mortgage closing costs cover expenses associated with getting a home loan, from inspections and appraisals to title insurance, taxes and more. On average, the home buyer’s closing costs are equivalent to 3-5% of the home’s value (home sellers additionally pay an average of 1-3% of the home’s value in closing costs). Let’s take a closer look at what fees make up your closing costs as a buyer. Here are some fees commonly included in the buyers closing costs.
Loan Origination and Application Fees
The loan origination fee is an upfront fee that is charged by the lender to process a new home loan application. Additionally, the application fee is the cost associated with the application you initially filled out to see the maximum loan amount you could qualify for.
Appraisal Fee
The appraisal fee covers the cost of having a professional appraiser come out and evaluate a home and estimate the market value of the home. This fee varies between $400-$800 depending on where you live.
Transfer taxes
A transfer tax is a tax on the passing of a title to property from one person to another.
Recording Fees
A recording fee is the fee charged by a government agency for registering a real estate purchase or sale, so that the information is open to the public. Typically recording fees are charged by the county.
Discount Points
The fee associated with lowering the interest rate. The more points you pay, the lower your interest rate. A buyer can typically buy from one to three points, depending on how much they want to lower their interest rate.
Title Insurance
This insurance policy that protects against loss should the condition of title to land be other than as insured.
Miscellaneous Fees
These fees include document preparation, courier charges, notary fees, administrative fees, and document review fees.
Other Fees
These fees can include a few months of prorated HOA fees, property taxes, and any fees associated with the builder if the house is brand new.
When you’re making the decision to buy your home you’ve got a lot on your mind, so don’t let closing costs confuse you. As your mortgage broker, I’ll lay out estimated closing cost amounts before you go in to officially pay closing costs. Once you have a clear understanding of how much you will have to pay at closing, you can budget for this amount when thinking about your overall house expenses.
Looking to buy or sell a home? Contact me and I’ll help you calculate the total cost including closing fees so there are no surprises when you sign on the dotted line.
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