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| Closing Costs, What To Expect.. |
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| Typically, total closing costs will be from 3-7% of your mortgage amount. The Good Faith Estimate is subject to change in certain categories. The Real Estate Settlement Procedures Act, provides borrowers the right to request a HUD-1 Settlement Statement. The HUD-1 details the actual fees that will be required. It is important to review this statement and ensure that you agree with and understand all the costs and fees listed. |
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| Fees such as the application fee, credit report fee, or the appraisal fee may be required with the loan application before the closing. Certain fees vary from lender to lender, but generally, taxes, appraisals, credit reports and title insurance should be comparable for all borrowers. |
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| Fees to Expect: |
| Loan Origination Fee: a percentage of the mortgage (generally 1%), charged to set up and evaluate the loan application. |
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| Application/Underwriting Fee: required by the lender to process your loan application, often required with the application, generally non-refundable. |
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| Credit Report Fee: requested by the lender in order to evaluate your loan application (generally obtained from one of three major credit reporting agencies: Equifax, Experian, TransUnion).MABC Mortgage Does Not Charge a Credit Report Fee. |
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| Appraisal Fee: used to obtain an independent appraisal of the home to be mortgaged; the appraisal is a factor in determining the amount the lender will loan. |
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| Survey Fee: may be required – verifies the legal position of the home on the property and ensures that there has been no encroachment on the property. |
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| Title Search Fee: charged for a detailed search of the historical records related to a property to ensure that the seller is legal owner, that there are no liens, restrictive covenants, outstanding judgments or other claims against the property (A certificate of title issued as a result of a title search does not necessarily protect against hidden defects which did not show up in the search – often the lender will require title insurance for protection against such claims). |
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| Title Insurance: often required by the lender for protection against hidden title defects; a lender’s policy only protects the lender – a buyer may also opt to purchase an owner’s title insurance policy. |
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| Discount Points: optional payment to lower the interest rate (each point is 1% of the mortgage amount – $120,000 mortgage discount point would cost $1,200 and typically lower the interest rate by 0.125 percent). |
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| Recording or Transfer Fees: a small fee charged to cover the paperwork to record the home purchase and transfer ownership. |
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Interim Interest: interest from the closing date to the end of the month generally charged to the buyer.
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| Property Taxes: buyer’s prorated portion of state and local government property taxes already paid by the seller (such as annually paid taxes). |
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| Escrow Account Payments: (often required by the lender) charges to cover costs or payments which will be due after the closing; escrow accounts are often set up to continue for the life of the loan, where a specified portion of the mortgage payment goes into escrow to cover certain on-going property related expenses and payments such as taxes and insurance. |
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