8442 Old Keene Mill Rd
Springfield, VA 22152
People save and save to get enough money to make a downpayment to buy their home. Then when it comes time to find a home 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 may charge different fees as might the settlement agent. In some instances, we may 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. They are always subject to change.
Loan Origination: A fee sometimes charged by the lender. Expect it to be around 1% or less of the loan amount, but it could vary.
Loan Discount: Often called "points" or "discount points," a point 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.
Appraisal Fee: This charge pays for an appraisal report made by an appraiser. For a conventional loan this cost will be several hundred dollars. This fee may be charged at the time you make commit to a loan or at settlement.
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 or loan program, there may be 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 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:
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.
Title Charges: Title charges may cover a variety of services performed by the settlement or title company. For more information on this topic check the HUD booklet -- "Looking for the Best Mortgage".
Settlement or Closing Fee: This fee is paid to the settlement agent or escrow holder. The average cost is about $250 to $500.
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.
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.
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.
Survey: The lender may require that a surveyor conduct a property survey. About $200 to $400.
Pest Inspections: This fee is to cover inspections for termites or other pest infestation of your home. Average $35 to $75.
There could be other fees charged by the
lender or settlement company. From time to time the fees change. Let me
know if you would like an estimate on what your total costs might be to
purchase a home. The Dept of Housing and Urban Development -- HUD -- has
a booklet that provides some explanation on the above. See their booklet