March 4, 2015
Close-up on Closing Costs
When you’re buying a home, you’ll hear the phrase ‘closing costs’ over and over again. But what exactly are they? Typically, how much are they? Many home buyers have absolutely no idea – and are sometimes caught unaware. Here’s a quick primer on closing costs – and how you can prepare for them. First of all, closing costs will vary widely based upon your location and the home you’re purchasing. Keep in mind that if this is your second or third home buying experience, your closing costs may be very different this time if you’re moving to a different area or getting a house that is much newer or older than the one you’ve owned before. Some common elements included in closing costs are:
- Credit report fees.
- A loan origination fee, which lenders charge for processing the loan paperwork for you.
- Attorney’s fees.
- Inspection fees, if required or requested by any party.
- Discount points, or fees you pay in exchange for a lower interest rate.
- Appraisal fee.
- A survey fee for the cost of verifying property lines.
- Title insurance, which protects the lender if the title isn’t clean.
- Title search fees, which pay for a background check on the title to make sure there aren't things such as unpaid mortgages or tax liens on the property.
- Escrow deposit, which may pay for a couple months' property taxes and private mortgage insurance.
- Pest inspection fee.
- A recording fee, paid to a city or county in return for recording the new land records.
- Underwriting fee, which covers the cost of evaluating a mortgage loan application.