Closing Cost Estimate for a home in Northern Virginia

northern virginia title

remax
Tom Vesolich
RE/MAX Allegiance
"each office
independently
owned"

Licensed in Virginia
&
Maryland

Closing or Settlement Costs

People save and save to get enough money to make a downpayment to buy their home. Then when it comes time for the transaction they are shocked to find out there were other costs associated with buying a home that they did not know about. Below you will find a discussion of some of the costs associated with buying a home beyond the downpayment amount. These are known as closing or settlement costs. Don’t be dismayed as you read this. This discussion covers most of the closing costs but each lender or may charge different fees as might the settlement agent. In some instances, we pay be able to get a home seller to cover for some of these costs. But that is another topic. We can estimate what these costs will be for you and each lender is required to provide you with a "Good Faith Estimate" detailing what these charges would be.

Loan Origination: This fee is usually known as a loan origination fee but sometimes is called a "point" or "points." It covers the lender's administrative costs in processing the loan. This is normally 1% of the loan amount.

Loan Discount: Also often called "points" or "discount points," a loan discount is a one-time charge imposed by the lender or broker to lower the rate at which the lender or broker would otherwise offer the loan to you. Each "point" is equal to one percent of the mortgage amount. For example, if a lender charges two points on a $100,000 loan this amounts to a charge of $2,000. The number of points charged varies with the interest rate.

Appraisal Fee: This charge pays for an appraisal report made by an appraiser. For a conventional loan this cost is averages $300. This fee is typically charged at the time you make your loan application.

Credit Report Fee: This fee covers the cost of a credit report, which shows your credit history. The lender uses the information in a credit report to help in the decision making process of granting you a loan. Approximately $55.

Mortgage Insurance Premium: This is for insurance for any loan in which the purchaser has made a downpayment of less than 20%. Depending on the lender, there are ways to eliminate this charge.

Assumption Fee: This is a fee which is charged when a buyer "assumes" or takes over the duty to pay the seller’s existing mortgage loan. Generally on FHA and VA loans are assumable. You would have to check with the lender on what this fee would be.

Items Required by Lender to Be Paid in Advance: You may be required to prepay certain items at the time of settlement, such as accrued interest, mortgage insurance premiums and hazard insurance premiums.

Interest: Lenders usually require borrowers to pay the interest that accrues from the date of settlement to the first of the next month. So the closer you settle to the end of a month, the lower this cost will be.

Mortgage Insurance Premium: The lender may require you to pay your first year’s mortgage insurance premium or a lump sum premium that covers the life of the loan, in advance, at the settlement.

Hazard Insurance Premium: Hazard insurance protects you and the lender against loss due to fire, windstorm, and natural hazards. Lenders generally require the borrower to bring to the settlement a paid-up first year’s policy or to pay for the first year's premium at settlement. Estimate this cost at $2.50 per $1000 of the sale price.

Flood Insurance: Required if the home is in a flood plain area.

Escrow Account Deposits: These are a prepayments of taxes and/or insurance and other items that must be made at settlement to set up an escrow account. The lender is not allowed to collect more than a certain amount.

Hazard Insurance months -- about two to three months of your hazard insurance premium
Mortgage insurance months -- check with the lender
City or County property taxes -- three to six months of the property taxes on the home
Homeowner Association Fees -- this depends on what the homeowner association fees are.

Title Charges: Title charges may cover a variety of services performed by the settlement or title companies . Your particular settlement may not include all of the items below or may include others not listed.

Settlement or Closing Fee: This fee is paid to the settlement agent or escrow holder. The average cost is about $250 to $350

Document Preparation: This is a separate fee that some lenders or title companies charge to cover their costs of preparation of final legal papers, such as a mortgage, deed of trust, note or deed. Estimate $100 to $400.

Title Insurance: This is a special insurance that protects you and the lender for any claims against the title, should they ever arise. The lender requires you to have this insurance. Coverage for yourself is optional. It is a one time charge.

Lender's Title Insurance: $2.90 per $1000 of the loan amount.
Owner's and Lender's Combined: $4.90 per $1000 of the sale price.

Government Recording and Transfer Charges: These fees may be paid by you or by the seller, depending upon your agreement of sale with the seller. The buyer usually pays the fees for legally recording the new deed and mortgage.

Recording the Deed -- $34 plus $3.34 per $1000 of the sale price
Recording the Deed of Trust (mortgage) -- $46 plus $3.34 per $1000 of the loan amount

Transfer taxes: Localities collect these fees whenever property changes hands. The cost is $1 per thousand dollars of the sale price. This is generally paid by sellers. Builders of new homes like to charge this to the purchaser.

Survey: The lender will require that a surveyor conduct a property survey. About $200 to $300.

Pest Inspections: This fee is to cover inspections for termites or other pest infestation of your home. Average $40 to $50.

Let me know if you would like an estimate on what your total costs might be to purchase a home