Closing Costs
Closing Costs:
Closing costs can vary greatly depending the type of loan and the borrower’s credit score (from 2% to 5%). ALWAYS, ALWAYS, ALWAYS get a Good Faith Estimate (in writing) from your lender outlining the costs you will be expected to pay. Here are some fees you might see on that GFE:
- Origination Fee (usually around 1% of the loan amount). This is how the mortgage broker gets paid for selling you a loan. The low rates you see in any advertising almost always include an origination fee. If there is no origination fee, typically the interest rate will be slightly higher.
- Appraisal Fee. Sometimes required as an upfront fee. This typically runs $250 to $450. If you have an appraisal done and don’t close on the property for some reason, you will forefit this charge.
- Credit Check Fee. $15 to $50
- Flood Certification Fee. $10 to $25
- Attorney Fees. $175 to $275. Sometimes separated into two categories (closing fee & document prep).
- Courier Fees. $20 to $75
- Power of Attorney. $25 to $100 if needed.
- Title Insurance. Though negotiable, the seller typically pays for the title insurance policy in Davidson county EXCEPT in the case of new construction when the buyer becomes responsible. Samples (100k = $595, 200k =$901, 300k =$1375)
- Tax Stamps/Transfer Tax. Typically one of the buyers largest closing cost. These fees are based on sales price and set by the state & city.
- Filing Fees/Recording Fees. Varies by number of pages in the property deed
- Discount Points – if buying down rate.
- Tax Service Fee. $50 to $100
- Processing/Underwriting Fee. Varies by lender
- Document Review.
Pre-Paids:
- Pro-rated Taxes.
- Pro-rated Mortgage Interest (varies by closing date).
- HOA Start-Up or Transfer – $0 to $495
- HOA Reserve Cushion – two months is typical.
- Lender Required Reserves – When setting up a monthly escrow account, most lenders require 3-6 months worth of taxes and/or insurance be placed in reserve.
Other Fees To Consider:
- Home Warranty. If ordered
- Various Inspections (Formal Home Inspection, Radon, Air-Quality, Lead-Based Paint, etc.- usually paid in advance)
- Interest Rate Lock Fees (applied as a credit at closing).
- Earnest Money Deposit (applied as a credit at closing). I recommend 1% as a base earnest money deposit. A larger deposit usually conveys a stronger offer.
