Closing Cost Breakdown

Closing Cost Breakdown

House hunting, down payment, mortgage loan… the most common things people know about buying a house, but what costs are missing? After saving for a down payment, closing costs can come as a shock to some homebuyers. It’s better to be prepared and know what to expect before being surprised at closing.

The average closing costs run between 2% and 5% of the loan amount. For example, a home purchase of $300,000, would have closing costs between $6,000 to $15,000.

Some lenders will allow you to finance them and add them into the loan, but then they would have interest through the life of the loan, costing much more than if paid upfront.

The closing costs will be outlined in the Loan Estimate given by the lender and in the Closing Disclosure given to you before the settlement.

The fees may be difficult to understand, but can be broken down into 5 sections:

• Non-Recurring Costs Associated with the Lender
  -Loan origination fee, loan discount, appraisal fee, credit report, lender’s inspection fee, mortgage broker fee, tax service fee, flood certification fee, flood monitoring, etc.
  
• Lender Fees (This is not dependent on the cost of the loan and may vary between lenders)
  -Document preparation, underwriting fee, administration fee, appraisal review fee, warehousing fee
  
• Items to be Paid at Close of Escrow
  -Prepaid interests, homeowners’ insurance, VA funding fee, up-front mortgage insurance premium (UFMIP), mortgage insurance
  
• Deposited Reserves
  -Funds in an impound account that the lender uses to make the payments on your bills as they come due. This could be impound escrow accounts that hold money for homeowners insurance, property taxes, mortgage insurance, etc.
  
• Non-Recurring Costs Not Associated with the Lender
  -Closing/escrow/settlement fees, title insurance, notary fee, recording fee, pest inspection, home inspection, home warranty, etc.

For more information on closing costs, loans, and refinancing, call or text us at 954-559-4644. We are licensed MLOs with over a decade of experience. We are here to help you fund your dreams!