When the time to close on your mortgage loan approaches, your Realtor will likely brief you on your expected closing fees. Since most people don’t purchase property every day, these costs might otherwise come as a surprise to you. But understanding closing costs is important — particularly when you consider these fees typically comprise 2-5% of the loan principal.
The experts at River Valley Title Group want to help you understand the fees you’ll be paying at the closing table, so we’ve assembled a list of standard services and items that may be included in your closing costs. They range from administrative costs for those who work on your home buying process to expenses associated with determining your loan approval, insurance and inspection costs.
Your lender invests time processing your loan application, and many recoup that cost with an application fee. This may include the cost of checking your credit score, the appraisal of the property and more.
To determine the interest rate you’ll pay on your loan as well as your overall approval, your lender will need to pull and review a credit report. This fee covers that expense.
Before a lender can approve your loan, they must determine the fair market value of that property, which is the purpose of the appraisal.
Loan fees may include an underwriting fee that covers your lender’s work to determine whether you are approved for the loan. You will also likely pay a loan origination fee that covers the administration costs for the mortgage lender. In some cases, there may be no loan origination fee.
There may be several associated insurance fees that you pay at closing time. This may include lender’s and owner’s policy title insurance as well as private mortgage insurance, which you might pay depending on the amount of your down payment.
Your closing costs may include a deposit for your property taxes and mortgage insurance, any taxes due within 60 days of the property purchase and transfer taxes, which cover the fee associated with transferring the title from the seller to the new owner.
Many times, inspections costs are paid prior to closing, but they could also appear at the time of closing and appear on a closing statement. Inspection costs cover a home inspection to determine whether there are necessary repairs or issues with the property. They may also include a pest inspection fee and a lead-based paint inspection fee.
Often, legal documents needed for closing will be prepared by attorneys. This could include something as simple as preparing the deed or something more involved such as drafting an easement agreement or a land contract. This covers that cost.
Settlement or closing fees cover costs for those who conduct your closing. They play an essential role as a third party in the process of buying your new home.
You might see some other fees at closing time could include fees for a Home Owners Association transfer, FHA mortgage insurance premium, a courier fee, flood determination fee, survey fee, VA funding fee, and more. If you have questions about any of these fees, consult with the professionals who assist you with your home purchase.
When it’s closing time, it’s vital to work with a title company you can trust. Select a title company with a solid reputation, good word of mouth and a team of experienced professionals. When you work with the experts at River Valley Title Group, you can rest assured you will have a smooth closing process and take comfort in the knowledge your property is unquestionably yours.