What are closing costs

Most lenders and brokers will require your home be appraised. An appraisal is an opinion of value determined by a licensed real estate appraiser. On a typical residential property the cost of the service will usually be around $350.00. The range of expense can be from $350 - $1500 depending on the type of home, size and difficulty. The appraiser will normally collect the full amount at the time of inspection, however some lenders will require you to provide a form of payment at the initial time of application.

During any transaction there are fees charged by third party companies such as: Title insurance providers, and Escrow agencies. Possibly and attorney depending on the state which you live. Appraisers, notaries, inspectors, and recorders. On an average loan size we will say of $225,000, The total amount of these type of charges will be around 1% , or around $2,200 dollars. As the transaction amount increases some of the items will increase as well because they are determined by the size of the loan.

The total amount of items required to be paid through the transaction are termed "closing costs". This does not include anything your paying through the transaction such as bills or liens. These charges are simply line item fees required to be paid in order to close your loan.

Origination points: Usually 0% - 3% depending on difficulty of loan. Always negotiable
Discount fees: Charge to buy a lower interest rate from lender
Broker fees: $100 to $500 and is negotiable
Processing: $250 - $500 and is negotiable
Underwriting: Charged by bank $295 - $1200 depending on program selected
Title Insurance: Insures new lender against past undetected liens on home. (based on loan amount)
Escrow: Charge by attorney or escrow company for handling transaction $150 - $500
Property taxes and Insurance: Past due and up to 1 year taxes and 1 year property insurance

These are the typical items you will see on a closing statement provided by your broker or new lender. An estimate is required by law to be delivered to you within 3 days of your lender or broker taking a complete application. The estimate will provide a break down of all charges associated with your transaction.