Below is an overview of the types of closing costs you may incur on you loan. Some are one-time fees while others recur over the life of the loan. When you apply for your loan, you will receive a “good faith estimate” of settlement charges.
This fee covers the lender’s administrative costs in processing the loan. A one-time fee often expressed as a percentage of the loan.
Often called “points” a loan discount is a one-time charge used to adjust the yield on the loan to what market conditions demand. One point is equal to 1% of the loan amount.
This is a one-time fee that pays for an “appraisal” – a statement of property value – for the lender. An independent fee appraiser makes the appraisal.
This one-time fee covers the cost of the credit report, which is run by an independent credit agency.
There are two title policies – a lender’s title policy (which protects the lender against loss due to defetect on the title) and a buyer’s policy (which protects the buyer). These are both one-time fees.
The title company may charge fees for a title search, title examination, document preparation, notary fees, courier fees, recording fees and a settlement or closing fee. These are al one-time fees.
There may be a separate, one-time fee that covers preparations of the final legal papers, including the Note and Deed of Trust.
Depending on the time of the month your loan closes, this charge may vary from a full months interest to just a few days. If your loan closes at the beginning of the month, you will probably have to pay the maximum amount. If your loan closes at the end of the month, you will only have to pay a few days interest.
Depending on the amount of you down payment, you may be required to pay an up front fee for Mortgage Insurance. You may also be required to put a certain amount of PMI into a special reserve account held by the lender.
Taxes and Hazard
Depending on the month in which you close, you may be required to reimburse the seller for property taxes. You will also need to pay, or provide evidence that you have paid, an entire year’s hazard insurance premium up front. In addition, you may be required to pay a certain amount for taxes and insurance into a special reserve account held by the lender.
State established fee of $10.00 per signature
Fee paid to county to record documents
Fees charged for various inspections of said property.
Optional Warranty Package that pays for repair/replacement of home’s major systems and appliances.