What are closing costs?
Closing costs are fees charged by the lender and closing agent to process and record any new loan application and vary from state to state and county to county. These costs may include, but are not limited to, appraisal, credit report, title, prepaids, county and city taxes, recording fees and title insurance premiums. The exact costs depend on where you are buying or refinancing, the loan amount and the time of the month you close. In some jurisdictions, an attorney represents the lender and borrower and in others, a title company represents the lender and borrower at the closing. Prior to closing, be sure to inquire if the lender requires an escrow account set up for the payment of the real estate taxes and homeowners insurance. It is important that you review what the closing costs will be with your lender and closing agents. This should take place far enough in advance of the closing to allow you time to obtain the necessary funds to pay the closing costs.
On the day you actually buy your new home, in addition to your down payment, the prepaid property tax and homeowners insurance premiums, you’ll need cash for various fees associated with the purchase. These expenses are known as closing costs and are paid by both buyers and sellers. Some closing costs you pay up-front when you apply for a mortgage loan. Those include money for a credit check on all applicants and an appraisal on the property. Keep in mind that even if you don’t eventually receive the loan, that money is not refundable. Other closing costs are possible and should be considered when evaluating your financial situation. These may include, but are not limited to: a. Title insurance fee b. Survey charge c. Loan origination fee d. Attorney fees or escrow fees e. Document preparation fee f. Garbage or trash collection fees; and the big one g. Points-up-front interest paid in return for a lower interest rate. Each point is one percent of the loan amount. Sometimes you can cont
Closing costs may include loan origination fees, up-front fees, prepaid interest, application fees, appraisal fee, home inspection fee, survey, title search and title insurance, an amount placed in escrow, recording fees and attorney’s fees. Depending on your location, closing costs generally average 3 to 4 percent of your loan amount.
Closing costs are costs paid by the borrower at or prior to closing charged by the lender and other parties to make the loan. These costs include points, origination fees, title insurance fees, recording fees and bank attorney fees. In addition, the lender typically will establish an escrow account at closing, and you will need to fund the account with cash. The escrow monies are used to pay your taxes and homeowners insurance as they become due. Generally, borrowers should estimate that their closing costs total between 5% and 7% of the loan amount.
