You’ve found your dream home, the seller has accepted your offer, and your loan has been approved. You’re very excited to prepare to move in, but there’s one final step: the closing, also known as the settlement.

This process transfers ownership from the seller to the buyer, requiring you to sign numerous documents and present a check for the down payment and various closing costs. Here’s a rundown of the common fees involved:

1. Appraisal Fee: Payment for the property appraisal, often covered at the beginning of the loan application process.

2. Credit Report Fee: Covers the cost of the credit report requested by the lender, typically paid during loan application.

“Understanding and preparing for closing costs can’t be skipped in the home buying process. ”

3. Loan Origination Fee: Covers the lender’s loan processing costs, usually around 1% of the total mortgage.

4. Title Insurance Fees: Includes costs for the title search, title examination, title insurance, document preparation, and other miscellaneous title fees.

5. PMI Premium (Private Mortgage Insurance): Required if your down payment is low, protecting the lender against loss due to foreclosure. Can be eliminated once you have 20% equity in your home.

6. Prepaid Interest Fee: Covers interest from the purchase date to the first mortgage payment date, higher if you buy early in the month.

7. Escrow Accounts: Holds funds for future property taxes and home insurance, usually collecting one year’s worth plus two months of homeowner’s insurance premiums.

8. Recording Fees and Transfer Taxes: Charged by most states for recording the purchase documents and transferring property ownership.

Understanding and preparing for closing costs can’t be skipped in the home-buying process. By familiarizing yourself with these fees and expenses upfront, you can avoid surprises and ensure a smoother transaction.

If you have questions or are ready to begin the home-buying process, just call or email us. We’d love to hear from you!