Mortgage Closing Costs

Closing Costs That You Should Know

In addition to the basic mortgage underwriting, processing and origination fees that are charged by a lender, there are several other costs associated with purchasing a new property. Since every player on your real estate home buying team has a stake in your transaction, it’s a good idea to know how to budget for their services.

Common Expenses

The items below are common to a real estate transaction and you may be required to pay for them up front:

01. Home Inspection

This is usually money well spent since the inspector will evaluate many aspects of your new home to ensure all systems are functioning as they are intended to.

02. Condominium Questionnaire Fees

This may be required by your lender, and can take up to 30 days to receive. Fees can range anywhere from $0 to $300 depending on the complex.

03. Well and Septic Certifications

If your new home has either of these systems you will want to be sure that they are functioning properly.

04. Survey

This document outlines the borders of your property, and the price can vary depending on the size of the lot and if it was actually staked out. A survey is not a requirement for all purchase transactions.

05. Appraisal

Depending on your state, loan size, property type, loan program and lender, the appraisal may be required to be paid for up-front by the borrower. And, in some cases, more than one appraisal may be required, especially if the borrower is switching lenders and using conventional financing.

Learn More

Closing Costs FAQs

  • What are mortgage points?

    Mortgage points are fees charged by the lender for services and/or a lower interest rate. One mortgage point is equal to one percent of the loan amount. For example, on a $100,000 mortgage $1,000 would be equal to one point. Understanding what points are and how they work can save you thousands of dollars on your mortgage. Borrowers can pay mortgage points to reduce the interest rate charged on their mortgage. The borrower may also choose to raise the interest rate to reduce the closing costs.

  • Where does my earnest money go?

    An earnest money deposit (EMD) is simply held by a third-party escrow company according to the terms of the executed purchase contract. For example, there may be a contingency period for appraisal, loan approval, property inspection or approval of HOA documents. In most cases, the earnest money held by the escrow company is credited towards the home buyer’s down payment and/or closing costs.

  • Do I have to pay my real estate agent for a purchase transaction?

    In most cases, the buyer is not responsible for covering the cost of their real estate agent. When a homeowner hires a real estate agent to list, market and sell their property, they’re also (in most cases) agreeing to compensate the agent representing a buyer.

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