All You Need to Know About Closing Costs
- Application fee: Covers all administrative work required to process your application for a home loan.
- Appraisal: Covers the fee of a professional appraiser to provide your lender with an estimate of your home’s true value.
- Attorney fee: In some states, the closing documents must be reviewed by an attorney before they become binding. This charge covers the attorney’s fee.
- Closing fee or escrow fee: The cost of the title company, escrow company or attorney for facilitating the closing.
- Credit check: Some lenders charge a fee to examine your credit history.
- Escrow deposit: You may be asked to make your initial escrow deposit at closing, covering the first two months of property taxes and mortgage insurance payments.
- Home inspection: The cost of a professional inspection of your entire home and property.
- Homeowners’ insurance: Many lenders require you to pay the first year of homeowners’ insurance premiums at the closing.
- Lender’s policy title insurance: This insurance assures the lender that you own the home and the lender’s mortgage is valid.
- Origination fee: This helps compensate workers involved in marketing for the loan company and those who will help you with the borrowing process.
- Prepaid interest: Most lenders require buyers to prepay the interest that will accrue from the day of closing until the date of the first mortgage payment.
- Primary Mortgage Insurance (PMI): If you need to pay PMI on your loan, the first month’s premium is due at closing.
- Title fees: This covers the cost of a title search, in which your lender hires a title company to look for possible legal claims on your property.
- Underwriting fee: This fee goes directly to your lender. It covers the cost of researching whether you should be approved for the loan.
« Return to "Money Matter$ Blog"