What Are Closing Costs & Fees Charged By Your Lender
Buying a home is undoubtedly one of the most expensive ventures of your lifetime. But it’s important to understand that much more goes into budgeting for a new home than the price of the house itself—like closing costs.
are fees charged by the lender at the closing of your real estate transaction, and usually amount to thousands of dollars. Your real estate agent can explain and estimate what all of your particular closing costs will be, as they vary by state, but here is a handy list of terms and definitions from Bankrate.com to help bring you up to speed. Real estate lingo can be confusing, so becoming familiar with these terms in advance will help demystify the closing process.
Origination, broker, lender or originator:
A fee charged to create a home loan. It’s often a set percentage of the mortgage amount.
A fee in the form of mortgage interest paid upfront. In exchange for this fee, the lender reduces the interest rate. One point is equal to 1 percent of the loan amount.
A fee that is passed on to a company that renders an opinion about the real value of the home, independent of its listing or negotiated price. That value is then compared against what the borrower has agreed to pay.
A fee charged to order a history of your financial life. It includes details about your behavior as a bill payer, the amount of debt you owe, your available credit and any inquiries that companies make to obtain this information, such as your mortgage lender. A good credit report means better loan terms.
A fee to cover the cost of hiring a company to verify the amount of real estate taxes due and making sure they’re paid.
A fee that covers the assessment of whether a property is in a flood zone. If it is, the new homeowner must buy a flood insurance policy.
Charges for administrative costs (such as title search) associated with the delivery of title insurance, as well as the services provided by a title or escrow agent.
A policy that guarantees that an owner has the title to a property and can legally transfer it to someone else. Should a problem arise, the title insurer pays any legal damages. A policy may protect the mortgage lender, the homebuyer, or both.
Attorney, closing or settlement:
The amount paid to an attorney for witnessing the mortgage loan transaction.
Document preparation: A fee a lender charges to a borrower for producing the documents signed at the closing table.
Inspections (pest, etc.):
A fee paid to a certified person who searches the dwelling for termites and other destructive creatures.
This fee covers what it costs a lender to send paperwork to the other entities involved in the mortgage transaction.
A fee charged to hire a licensed surveyor to get an accurate measurement of the property and its boundaries.
Wire transfer fee:
The amount charged to transfer funds needed to close on a home loan.
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