What are Closing Costs ?
Any new mortgage, whether a purchase or a refinance, requires that a multitude of different services be performed on the borrower's behalf. This does not mean you have to pay other lenders' "junk fees" or that you need to overpay for these services! Always question any charge you don't understand and anything that looks unusual. Also, make sure you're not being charged for the same service twice.
Actual Closing Costs will vary with the size of the loan as well as several other factors. These factors include: whether it's a purchase or a refinance, the size of the loan, which lender, what day of the month you close, whether you have impounds, etc.
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Application and Credit Report Fees - $30 - $300; Fees charged to cover the costs of processing your application and/or running your credit report. We never charge an Application Fee or Credit Report Fee. Lenders that charge these fees and then "refund" them at the time of closing essentially have you and your money held hostage. You should never pay these fees, ask us why!
Origination Fee - $300 - $3,000; Fee charged to cover the "administrative cost" of the loan. We never charge an Origination Fee or any other deceptive fees. This is often a way for the lender to disguise points or other costs of the loan so that they can advertise a lower interest rate and then trick you into calling them. You should never pay an Origination Fee, ask us why!
Lock Fees - $50 - $200; Fee charged to "cover the cost" of locking a loan. In actuality it often costs nothing to lock a loan. These fees are charged all the time and penalize you if rates go down. Lenders that charge these fees and then "refund" them at the time of closing have you and your money held hostage. Don't pay a Lock Fee, ask us why!
Summary of Closing Costs:
These fees may or may not be incurred depending upon the type of loan you get. Some lenders "bundle" these items so that you see fewer charges at settlement. We also bundle some costs if it works out better for you.
Points (AKA Discount Points) - Percentage of Loan Amount; Optional
Processing Fee - $495; not charged on 2nd Mortgages
Appraisal Fee - $325 - $500; If not appraised in past 6 mo.
Document Preparation Fee - $0 - 300; Lender Fee
Underwriting Fee - $0 - $400; Lender Fee
Tax Service Fee - $0 - $70; Depends on Lender
Flood Certification - $0 - 20; To Determine if in a Flood Zone
Escrow Fee - Varies by loan type (purchase, refi, etc.); Volume savings are passed along to our customers
Title Insurance - Varies by loan size; Our volume eliminates all but one title charge for our customers
Recording Fee - $70 - $100; To Record Your New Loan
Notary Fee - $0 - $100; Notary May Come to You
These charges may or may not be incurred depending upon your loan type and when your loan closes
Prepaid Interest - Catch-up "Mortgage Payment"
Escrow Accounts or Impounds - Usually Optional