Not only do you need to understand what type of mortgage you should select, but you must also understand and analyze the closing costs associated with financing. Closing costs are charges, fees and pre-paid items for originating and processing your loan. Closing costs can even include an optional expense you pay to reduce the interest rate, known as a discount fee or discount points.
While specific costs will differ from state to state and from lender to lender, there are a number of fairly standard costs you can expect. A quick list of closing costs are referenced below.
- Example(s) of Broker Fees:
- Origination Fee
- Processing Fee
- Application Fee
- Administrative Fee
- Example(s) of Lender Fees:
- Underwriting Fee
- Discount Fee (Discount Points)
- Funding Fee
- Lender Fee
- Document Preparation/Review Fee
- Tax Service Fee
- Example(s) of Title & Escrow Fees:
- Attorney's Fee
- Title Insurance
- Transfer Tax
- Recording Tax
- Notary Fee
- Escrow Fee Insurance
- Reconveyance Fee
- Example(s) of Other 3rd Party Fees:
- Appraisal Fee
- Credit Report Fee
- Termite Inspection Fee
- Homeowners Insurance Premium
- Property Survey
Keep in mind that brokers/lenders are required to give you a Good Faith Estimate with your closing costs broken out into sections within three days of application. Additionally, at closing, you will receive a Settlement Statement (also known as a HUD-1) that discloses the final closing costs that you are required to sign in acknowledgement.
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