Are you planning to buy a new house or refinance your current mortgage. I recently did this just a few weeks ago and one of the looming questions going through my head was how much are the closing cost going to be.
The truth is closing cost can vary by location, by loan type, and even by the lender you happen to be going with. In this article I’m going to give you a complete breakdown of the mortgage closing cost I paid and exactly what was all involved.
Fee #1: Appraisal Fee $300
The first fee I had with my loan was my appraisal fee which cost me $300 in all. This fee will vary by appraiser but I’ve seen them as low as $250 and as high as $450 in my area.
Quick Tip: Ask your bank who their appraiser is, find out what they charge, and ask to see if you can pick an appraiser with a lower fee.
Whenever you are doing a mortgage there must be an appraisal done on it. Typical appraisals will base the value of your home on the value of 3 other similar properties that recently sold in your area, and if those properties sold fairly high the value of your home may be higher as well.
You are also entitled to receive a free copy of your of your appraisal and see exactly which properties they used to value your property.
Fee #2: Credit Report $37
The next fee I had was a $37 fee to check my credit scores. Like the appraisal this is a required fee and the lender must pull your credit.
Quick Tip: You are also entitled to see a copy of your credit report and score when your lender pulls it.
If you want save a little extra money on your interest cut down your debt and don’t miss a payment on anything. One missed payment or to much debt may raise your interest rate or even worse you may not get the loan at all.
Fee #3: Flood Certificate $11
The next fee I had on my closing cost was for a flood certificate. This is a basic evaluation done to prove that your property is not sitting in an area that could be easily flooded out. What’s kind of interesting about all of this is their is a creek that runs through my backyard but it would take an awful lot of water to get close to my house.
On top of that I’ve seen some pretty hard storms come through since I’ve moved into my house and I’ve yet to see the water come anywhere close to overflowing the creek banks. This fee may not be included in all closing cost, and it may just be for the fact that I have a creek in my backyard that I need to have it done.
Fee #4: Daily Interest Charges $23.58
This next fee is a bit of an odd one. When you close on your loan a daily interest charge will be added depending on the day of the month you close on your loan.
Quick Tip: Try to close your mortgage on the last day of the month so you will only have to pay one days worth of interest.
The way the daily interest charge works is if you close your mortgage on the first day of the month and there are 30 days in the month you would owe $23.58 times 30 days, adding up to $707.40. I should also mention the daily interest charge can vary depending on your bank and the rate you have.
In my case it only cost me $23.58 because I was able to close on the last day of the month.
Fee #5: Title Services & Lenders Title Insurance $1023
Fifth on the list of fees was the title services and the lenders title insurance. These are also standard things you will find with any closing cost. Typically what happens here is a lawyer will have to preform a search on the deed to make sure their is no lien and that everything is correct.
Title insurance is also applied to insure that everything is correctly stated on the deed and protect in the event that something has been declared false. The fees for these services can usually be fairly expensive and are one of the bigger cost in closing a mortgage. To learn more about title insurance check out this article.
Fee #6: Deed $156
Once the title services have been preformed the deed for your mortgage must be printed and recorded.
Quick Tip: Make sure the property is deeded in both spouses names because if one of you should happen to pass on you will not have to go through probate to get it back.
Your deed will contain everything from a description of the property, the names of the grantor and grantee, to the proper legal language to that will actually transfer the property. For more in depth information check out this article.
Fee #7: Property Survey $200
Finally, depending on the type of loan you are doing you may need a property survey done. In my case I had to have one done since my house was brand new. The purpose of it was to prove that my house was properly positioned on the property and that it wasn’t sitting on a property line. In my case everything checked out OK.
Now if you are doing a refinance on your current mortgage a survey will not have to be preformed unless you have done some sort of structural improvement to the property such as adding on to your house.
Total Mortgage Closing Cost
In all my total closing cost was $1750.58 which isn’t to bad. This is actually lower than most other closing cost I’ve seen.
Quick Tip: Larger banks and lenders such as Country Wide and Bank Of America will charge around $3500 while smaller banks will typically charge less.
Finally, know that banks are required to show all the fees involved with your closing cost and most if not all lender will disclose these things but may not go into to much detail with them. So make sure you take the time to ask what every fee is if you don’t understand it and in the end it will give you a better understanding of how the entire process works.