Closing Costs Explained

*Closings can be costly.  Consider putting closing costs into the contract or rolling some of the cost into your mortgage.  Often, lenders will give a buyer a “Good Faith Estimate”.  If you aren’t offered one, ask so you can have a rough estimate of what to expect.*

Mortgage Origination Fee – Somewhere between $1,000 and 1% of loan charged upfront by the lender.

Underwriting Fee – Charged by the lender to determine the risk of your mortgage. TIP : sometimes this can be waived or negotiated.

Credit Report – Charged by lender to determine your approval amount for loan.

Lender’s and Owner’s Title Insurance – These are purchased separately to protect the lender and owner of loan in case a problem with title arises.

A Tax Service Fee – Covers the tracking and distributing of your property taxes.

Survey Fee – Lender may request a survey of property to determine property boundaries.

Appraisal Fee – A quick examination of the home supplied usually by the lender to determine the value of the property.

Home Inspection – Paid to inspector to determine what repairs your home needs before closing.

Pest Inspection – To determine if termites or other pest are present on the property.

Settlement/Attorney Fee – Paid to settlement agent or escrow holder.  Can be paid by buyer or seller.

Title Insurance – Covers a title search to make sure no one else has a claim to the property. TIP : ask about a reissue rate.  If the home was sold recently then it’s had a title search done recently.  This means most of the risk is already lifted.

County Fees – Some counties will charge transfer taxes, recording fees or title fees to simply record that the property is now owned by someone else.  Call your local county to see if these charges would apply to you.

Prorated Property Taxes – Sometimes charged by the lender upfront to make sure they receive property taxes through the end of the year after closing.

Homeowners Insurance – A first year premium is often paid upfront to protect homeowner and lender of sudden property damage by natural causes.

Home warranty – A policy to protect the buyer from sudden failures in existing, specified appliances in the home within a year of purchase.  Not required, but heavily suggested.