Many of your mortgage closing costs go to a third-party for services necessary to complete the transaction. Lenders typically have no control over these fees.
• Appraisal ($225 – $450) *
The appraisal is required to determine the fair market value of the home. A property appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property. Therefore, an appraiser is needed to make this determination and buyers need this money outside of the closing cost.
• Home Inspections Fees ($275 to $400) *
A professional home inspection will give you an unbiased, informed report on the condition of the home and its systems. It will help you reduce your risk and make an informed purchase decision. They will inspect the structure and all the major systems of the house and provide you a comprehensive, easy to understand report. Typically a 25-30 page narrative report includes digital pictures and addresses the Roofing, Exterior, Interior, Structural components, Plumbing and Electrical systems Heating/Air conditioning system, Insulation and ventilation and Built-in kitchen appliances.
• Credit Report ($15 – $30)
When you apply for a mortgage, you have to prove that you are capable of paying it back. Lenders will obtain a copy of your credit report to review your borrowing history and ultimately determine if they should risk lending you money. This fee goes to the credit reporting agency like Experian, TransUnion or Equifax.
• Title Closing Fee ($150 – $250)
This fee is paid to the title company or attorney for conducting the closing.
• Title Company Title Search or Exam Fee ($100 – $250)
This fee is paid to the title company for doing a detailed search of the property records for your home. The title company will look at prior deeds, court records, property and name indexes, and many other documents. This is to ensure that there are no liens or problems associated with your ownership of the property.
• Survey Fee ($125 – $150)
A survey of the property may be required to verify boundary lines for your property and to ensure that there is no encroachment on the lot.
• Flood Determination/Life of Loan Coverage ($15 – $25)
This cost goes to determining whether or not your property is located in a federally designated flood zone. If the property is found to be located within a flood zone, you will need to buy flood insurance.
• Title Company’s Courier Fee ($30 to $75)
This covers the cost of transporting documents to complete the loan transaction as quickly as possible to avoid paying additional interest on your mortgage loan.
• Title Insurance (Lender’s Policy) (Varies – generally between $200 – $875)
This covers the costs of assuring the lender that you own the home and the lender’s mortgage is a valid lien.
• Title Insurance (Owner’s Policy) (Varies – generally between $400 – $1000)
This is an insurance policy protecting you in the event someone challenges your ownership of the home.
• Homeowners Insurance (Varies – $500 and up)
Homeowners Insurance is required to cover possible damages to your home. In the event of a fire or other damage, homeowners will receive this insurance to cover the costs of rebuilding. Your first year’s insurance is often paid at closing with these funds.
• Title Company’s Lender required Endorsements ($250 – $400 and up)
This fee is paid to the title company for additional Lender required insurances on your behalf.
• Escrow Set Up ($1000 to $3500)
Preparing the account for the Lender so the future taxes and home insurance will be paid and monies accounted for the future payments when due. THIS IS NOT A FEE…but represents monies held on the Buyers behalf.
• Transfer Tax (.003 of the purchase price, $300-$1250)