When purchasing property, most buyers think and plan brokerage charges, registration fee only. There are many hidden costs held while buying a property at the time of closing. The good faith estimates (GFE) of a settlement or the closing costs lists the expenses you have to pay at settlement. Thus, these amounts add to a large sum. When choosing a lender it is important to consider the fees related to closing. It is not good to base your decision just on interest rate. As per federal law, within three days of applying for a mortgage, the lender needs to provide a good faith estimate. But there is often a large variance between what you actually end up paying and the estimate.
Typically the closing costs run between three to five percent of your loan amount. So if you are borrowing hundred thousand dollars you can expect the closing costs of three to five thousand dollars. If you are borrowing two hundred thousand dollars, you can expect closing costs of six thousand to ten thousand dollars. The following are the some of the costs you need to pay.
Typically the closing costs run between three to five percent of your loan amount. So if you are borrowing hundred thousand dollars you can expect the closing costs of three to five thousand dollars. If you are borrowing two hundred thousand dollars, you can expect closing costs of six thousand to ten thousand dollars. The following are the some of the costs you need to pay.
- Application fee: Application is charged when you complete the mortgage application. This fee covers the initial cost of the lender to process your application. In some cases, it includes the credit report and the cost of the property appraisal. If you want to know whether this fees are being charged as separate or included confirm with lender.
- Appraisal fee: The appraisal fee may also be charged when you complete the application. It covers the expenses of an independent appraisal of the value of home you are planning to purchase via your application. At the time you pay for the appraisal, you may be asked to pay for your credit report. In some cases, when the property appraiser arrives to perform the property appraisal, you may be instructed to pay the fee to him.
- Title Insurance: In most states the ownership of the property does not determine by the government. Changes in the ownership are recorded at local government level. To trace the ownership, title searches are necessary. Because of this reason, most lenders need that the borrowers purchase title insurance. It is to cover lender when a claim on the property that is not known at the time of closing. It covers the legal expenses in the event of claim in the future.
- Transfer taxes: When a home changes ownership, the local governments generally charge property, recordation and transfer taxes. These taxes can be substantial in some parts of the country. These cannot be reduced. You may ask the seller to share them. In some states, there is rule as the seller or buyer or both by split have to pay. These have to pay directly to the government at the time of closing but not to the lender.
