Buyers
and Sellers both have closing costs. Here we will deal mostly
with the Buyer's Closing Costs. |
Closings Costs are acquisition and transfer costs and not just the fees
paid when you sit down at the closing table. Some, such as the appraisal,
credit reports and application fees will usually be paid at loan application.
For
the most part, since these fees DO NOT
originate at the mortgage level they DO NOT VARY
from company to company, but that does not mean you won't get a wide
variety of quotes. There is no law requiring full disclosure of closing
costs (& no laws requiring disclosure of prepaid items at all!)
so many companies do not give accurate quotes. Many companies will understate
the closing costs to make it appear their costs are cheaper than
the next guy even though they are not. Practices like this can make
it very tough to get an accurate figure.
When
getting closing cost quotes, the most expensive quote is probably
the most accurate and the most honest mortgage company. |
Don't
(want to) believe it? Take several closing cost estimates to the title
company of your choice or one of our Closing
Partners & have them check the figures. It will be an
enlightening experience.
To
ensure you have accurate estimates, talk to both your Title company
and your Mortgage company to see what costs run for your city and home
type, but expect them to run 2.5-4% of your loan amount on a medium
priced home.
Any
closing costs quotes you get should have costs coming from 3 different
sources,
Mortgage
company
Investor
& the Title company
Since
closing costs and rates can't vary significantly from Mortgage company
to Mortgage company it makes it tough for a mortgage company "stand
out from the crowd" so it is not uncommon for less scrupulous Lenders
to quote you only THEIR PORTION of the costs as a way of making it appear
they are cheaper than their honest competition who is trying to give
you accurate figures so you can make accurate plans. Never accept statements
like "Our closing costs are . . ." Ask them point blank
"What will MY TOTAL costs be?"
top
Beware
of low ball closing cost quotes!
Title
companies tell us the average buyer is surprised at closing with
an extra $2,000 in costs over what was disclosed.
If
you should get a low quote be wary. As the Post Office says "If
it sounds too good to be true it probably is."
Shop
all you want, but no matter what you are told your actual closing
costs CANNOT vary significantly! There simply aren't any special
"deals" available on Closing costs because they consist
mostly of fixed fees from third parties like the Appraiser, Surveyor,
County Courthouse, etc. These costs must be paid to secure your
loan and successfully transfer the title. Other than raising your
interest rate to pay these costs there simply is no way to make
them diminish or disappear.
We have found that companies that are less than forthright with
their closing cost estimates will generally also be less than
truthful about other things. You have
been warned! |
top
Below
is a list of the typical fees that may be associated with closing your
loan.
| Mortgage
Company |
|
| Loan
Origination Fee |
usually
1% of loan |
| Appraisal
Fee POC (Paid Outside Closing) |
$300-$450 |
| Credit
Report P.O.C. |
$70 |
| Mortgage
Broker Compensation |
not
paid by you |
| INVESTOR |
|
| Loan
Discount Points |
dependent
upon rate |
| Processing
Fee/Admin |
$225
- $300 |
| Tax
Service |
$75
- $125 |
| Underwriting
Fee/Admin |
$100
- $350 |
| Flood
Certification |
$18
- $35 |
| Document
Preparation |
$75
- $125 |
| Attorney
Fees |
$175
- $250 |
| Termite
Certificate |
$50
- $75 |
| TITLE
COMPANY |
|
| Title
Insurance |
$175 |
| Escrow
Fee |
$80
- $150 |
| Tax
Certificates |
$36
- $55 |
| Transfer
of Lien |
$45 |
| Recording
Fees |
$35 |
| Survey |
$225
- $325 |
| Courier
|
$50
|
Keep
in mind you will have also to pay your downpayment and prepaid costs
on top of these figures.
home
