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What Are Closing
Costs?
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Many people are involved in the process
of buying or refinancing a house. They include the Realtor®,
lender, mortgage broker, appraiser, insurance company, inspector, title
company, your local government and your attorney. Each of these
parties charges fees for their services in processing and funding your
loan.
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Some
of the fees described below may not necessarily apply to your type of loan. |
 | Administration Fee
- A fee charged to administer the documents
in each borrower's file. |
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| Appraisal Fee
- This fee is paid to an appraiser for researching the fair market value of the property.
The appraiser compares the the property to other similar homes in the
neighborhood which have recently been sold. |
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| Attorney fee - Fee charged
by a law firm to oversee and close the loan. |
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| City/County
Transfer Tax - Taxes
charged when a property transfers ownership. Similar to a sales
tax, not to be confused with your local recurring property tax. |
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| City/County Property
Taxes - Taxes billed for the ownership of
property, usually paid twice a year. These taxes are generally
prorated and sometimes result in a credit from the seller when
purchasing a property. If you will have an escrow or impound
account, several months worth of taxes may be collected from you at
closing to deposit in your account. |
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| Courier Fee
- Paid to a courier for delivery of documents during the loan process. |
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| Credit Report -
This fee is charged at loan application to provide the lender with a
report detailing a borrower's credit history. |
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| Flood
Certification Fee - Paid for a flood
certification which states whether or not the property is located in a
flood zone. If so, the lender will require you to purchase flood
insurance. |
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| Hazard
Insurance - (Homeowner's Insurance) If you
are purchasing the property, the lender will require you to pay the
entire first year's premium. If you will have an escrow account,
at least two additional months will be charged at closing to deposit
in the account. |
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| Intangible Tax - Some
states require an intangible tax be paid at the time of closing.
This tax is based on a percentage of the loan amount. |
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| Interest to End
of the Month - Lenders charge interest from the
date the loan is funded until the first day of the following month. |
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| Inspection Fee
- This fee is charged for inspection of a property after
an appraisal. It is usually done if you are buying new
construction and the lender wants to be assured the house is
completed. |
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| Mortgage
Insurance Premium - Private Mortgage Insurance (PMI)
may be required on certain loans, generally if you are putting less
than 20% down or refinancing more than 80% of the property value. |
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| Origination Fee
- A fee charged by the broker for assisting the borrower
and obtaining a mortgage. This fee usually is computed as a percentage of
the loan amount. |
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| Pest Inspection
- Fee charged for a termite inspection of the property.
This may sometimes be waived, but some lenders may require it. |
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| Points -
Also known as discount points. A one time fee charged by the
lender to lower the interest rate normally charged. Each point
is equal to 1% of the mortgage amount. |
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| Processing Fee
- Fee charged to pay for the processing of the documents
associated with your loan. |
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| Recording Fees
- Fees paid to your county which records documentation
of your legal ownership of the property, such as the deed,
note, etc. |
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| Settlement or
Closing Fee - A fee paid to the title company for
handing all the financial transfers and payments associated with the
transaction. |
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| Tax Service Fee
- A fee charged for researching county tax records to
confirm that the taxes are paid in full and up to date. |
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| Title Insurance
- Guarantees that your property has no other lien or
claims against the property. Your lender requires that you
purchase title insurance. |
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| Underwriting
Fee - The lender's fee for reviewing your loan
application for approval. |
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| Wire Transfer
Fee - When you purchase or refinance, funds will
be wired to fund the transaction. The receiving account charges a
nominal fee for the wire transfer. |
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here to fill out an online application & get started right now. |
