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Buyer Process: Page 15

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Buyer’s Typical Closing Costs

Listed below are some of the typical closing costs that the buyer may incur as part of the loan transaction. When you apply for a loan, you will receive a Good Faith Estimate of closing costs and settlement charges along with a booklet that will explain these costs.

Appraisal Fee
This is a one time fee. The appraisal is made by an independent fee appraisal.

Credit Report Fee
One time fee that covers the cost of the credit report.

Document Preparation Fee
There may be a separate fee that covers the preparation of the final legal papers.

Loan Discount
A one time fee used to adjust the yield on the loan to what market conditions demand. It is often called “points”. It is prepaid interest.

Loan Origination Fee
The lender’s administration costs in processing the loan are covered by this fee.

PMI Premium
You might be required to pay an upfront fee for mortgage insurance if your down payment is less than 20% of the purchase price. The lender may also require monies to be placed into a reserve account held by them.

Prepaid Interest
Depending on the time of month your loan closes, this per diem charge may vary from a full month’s interest to that of a few days. If your loan closes at the end of the month, you may pay interest for only a day or so.

Taxes and Hazard Insurance
You may be required to reimburse the seller for property taxes, prorated, depending on the month in which you close. You will also need to pay a year’s hazard insurance premium up front. Also, you might be required to put a certain amount for taxes and insurance into a special reserve account held by the lender.
Beneficiary Statement Fee, Inspection Fees, Fire insurance premium for first year.

Title and Escrow
For your county, the buyer can expect to pay 50% of the fee charged for processing the escrow (escrow fee), the lender’s title premium, notary fees, and recording charges to record the grant deed and deed of trust and special delivery or courier fees, if required.

Homeowner’s Transfer Fee
Some HOAs will charge a transfer fee or move-in fee that is paid through escrow.