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Closing Costs - What to Expect

A house sitting on money

It might surprise you to find out that there are many fees associated with buying a home. Often future homeowners are shocked at the added costs of buying a home because of the varied closing fees for things such as document preparation and other types of administration fees.

Having an expectation of the potential closing cost associated with buying your home will aid you to budget your finances appropriately, and help you determine early on what you can realistically afford to pay for a home.

Lenders fees vary from state to state. However, you can expect certain fees to be tacked onto your loan. Make sure to check with your lender about the different costs that will be applied to your purchase for your home. Typically you will be required to pay these fees at the closing:

  • Processing Fees – Monies paid to begin the processing of the loan. Costs can run from a few hundred dollars to a couple thousand dollars.
  • Document Preparation Fees – A fee for the write-up of your loan. Costs run approximately from $100 – $400.
  • Review Appraisal Fees – Costs vary, but you can expect a payment of $200 on average.
  • Wire Fees – Electronic payment form for funding your loan. Fees fluctuate.

You need to be aware that there are other fees that will be incurred when purchasing a home. Some of the fees associated with buying a home are advanced or one-time fees and others are fees that will have to be paid again. Below are some of the other fees that you will be required to pay when purchasing your home:

  • Loan Origination Fees – Fees based on a point system for your mortgage. Usually if you are able to pay more in a down payment, your points will be lower, thereby saving you costs on a higher interest rate.
  • Credit Report and Underwriting Fees – Depending on the finical institution running a credit report the fees will vary, but expect to pay for a detailed report on your credit history. Costs are typically around $100. Costs for underwriting a loan can be on the costly side – running from several hundred to a thousand dollars.
  • Appraisal Fees – Prices vary on home price and geographic area. Independent appraisal fees usually run from $300 and upwards.
  • Homeowner Insurance Fees – Depending on the financial institution, a six-month to one-year payment for home insurance is usually required.
  • Title Insurance Fees – Check with your lender on cost.
  • Recording fees for things like the deed, mortgage and promissory note.

This list of fees is certainly not an all-inclusive list. Be sure to get a good faith estimate from your lender when you apply for your mortgage.

What Else is Involved in Your Closing?

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