There are
certain standard costs associated with closing the sale of a
house. These fees are split between the buyer and the
seller, as spelled out in the sales contract.
As we
negotiate the sales contract for you, we will not only work
to get the sales price you want, we will also work to limit
the number of closing costs for which you will be
responsible.
We will
walk you through the closing costs, answering any questions
you may have explaining which costs are decreed by law to be
yours and which are negotiable.
Loan Estimate
Buyers will receive a "Loan Estimate" of
closing costs at the time the loan application is submitted
to the lender. The estimate is based on the loan officer's
past experience and may not include all the closing costs.
We will be glad to review the "Good Faith Estimate,"
answering questions and highlighting missing costs and
estimates we believe to be low.
Loan Origination Fee
This covers the administrative expenses in setting-up
and processing the loan. The loan origination fee may be
a percentage of the mortgage amount.
Points (optional)
An option for the home buyer is to pay points to lower
the interest rate at which the loan will be repaid. Each
point equals 1 percent of the mortgage amount. For
example: on a $150,000 loan, 1 point would equal $1,500.
Appraisal Fee
The fee for having the house appraised may be
incorporated into the closing costs or payment may be
required by the lender at the time the loan application
is submitted.
Credit Report
The lender uses a credit report to determine the
creditworthiness of the loan applicant. This fee is
often paid when the loan application is submitted.
Interest Payment
Typically the buyer is required to pay interest on the
mortgage loan to cover the time between the closing date
and when the first mortgage payment period begins. For
example: If closing is on May 15. Your first monthly
payment begins to accrue interest on June 1 with your
first mortgage payment due July 1. At closing an
interest payment covering the accrual period between May
15 and May 31 may be required.
Escrow Account
At closing a payment may be required to fund the escrow
account if the lender is paying home insurance, property
taxes and/or other expenses out of the escrow account.
Property Taxes
This is the one closing cost that is often prorated
between the buyer and seller. If the seller has already
paid the annual property taxes, the buyer typically
reimburses the seller for the period in which the buyer
will be occupying the property. Likewise, if the taxes
have not yet been paid, the seller typically reimburses
the buyer for the period in which the buyer occupied the
property.
Transfer Taxes and Recording Fees
This is the cost for transferring ownership of the
property and recording the purchase documents. The fee
is often calculated as a percentage of the sales price.
Homeowner's Insurance
This insurance covers replacement costs for damages
caused by fire, wind or other disaster that might affect
the value of the property. Typically, the insurance also
includes personal liability and theft coverage.
Flood or Quake Insurance
Additional hazard insurance coverage that is required
for homes located in a designated hazard zone as
established by the Federal Emergency Management Agency (FEMA).
As we tour houses, I will let you know if the property
resides in a hazard zone.
Private Mortgage Insurance (PMI) Insurance required for conventional mortgage loans
when the borrower's down payment on the house is less
than 20 percent of the loan value.
Title Insurance This policy protects both the buyer and lender by
insuring a clear chain of title. (In other words, it
insures that that the person who sells the house has the
legal right to do so.)
American Home Lending
USA, LLC. NMLS ID 71983 is an approved Equal Housing Lender.
To verify licensing please visit NMLS Consumer Access (www.nmlsconsumeraccess.org). Mortgage rates
and programs subject to change
without notice. All borrowers must qualify per program
guidelines. Other restrictions may apply. These
materials are not from HUD or FHA and were not approved by HUD or a
government agency.
Privacy notice: Your privacy is protected on this site. We will
never reveal, sell, or submit your name, address, telephone numbers,
tax numbers, or e-mail address to any other vendors, real estate
agents, mortgage companies, or banks.
Equal Housing Lender.
