Ill admit it... there have been times when Ive signed a stack of closing documents without reading them.
I always felt uncomfortable to do so... but the deals needed to close and so I signed.
Now I make it clear to all parties in a deal that I will not sign anything unless I have a chance to review every document at least 24-hours before the scheduled close.
What fees and costs should you expect to review? Here are most of them...
Loan Origination Fee A lenders fee for establishing a new loan. Government regulations allow only 1% origination fee on FHA or VA loans. Conventional loan fees can vary from -1 to 3+ points, plus other costs. A point is 1% of the loan.
Appraisal Fee Fee paid to obtain an estimate of market value upon which the lender will base the loan amount. The cost varies, but is about $300-$500. Non refundable.
Credit Report An evaluation of the buyers credit habits made by a credit bureau for the lender. The cost is $50-$60. Non refundable.
Tax Service Fee A charge of approximately $75 is made by a tax service company to verify to the lender that the taxes have actually been paid when due or are due to be paid by borrower or mortgage company if mpounding.
Assumption Fee Fee of approximately $250 up to 1% of the loan balance is charged by the existing lender for the privilege of assuming the existing loan.
Pest Inspection Fee Fees of $75 - $175 is charged by termite companies for inspecting property for damage done by wood destroying organisms and dry rot. It is customary for the seller to pay for Section 1 and the buyer for Section 2 work.
Other Inspection Fees Other inspections the buyer may choose to have done are: property inspections that usually cover foundation, electrical, plumbing and overall construction at a cost of $300-$400.
Roof inspections cost $75-$125.
Geological reports cover subjects site in relation to fault and slide zones, costing about $100.
Septic $200-$400.
Radon $50-$100.
Asbestos $75-$125.
Alta Title Insurance This is an extended policy with more specific coverage than the CLTA standard policy. It covers unrecorded liens, is based on loan amount only and is required by almost all lenders. The cost is obtained from a rate chart and is based on the loan amount.
City Transfer Tax A municipal tax imposed within the corporate limits of some cities. The cost is $3.30 per $1,000 of selling price, usually negotiable between buyer and seller, but custom varies between counties. The VA does not allow the veteran buyer to pay any portion of this cost.
Miscellaneous Costs & Fees An estimate of $150 should be adequate to cover minor items as notary, recording documents, endorsements, etc. as well as allowing for variations from these other estimates.
Hazard Insurance Reserve Two months premium is collected for the impound account if required. The buyer will need to either provide or pay for coverage for the 1st year.
Prepaid Interest Interest must be paid from COE (close of escrow) to 30 days prior to the first regular loan payment. An estimate of one months interest should suffice.
Mortgage Insurance Mortgage Insurance is required on all conventional loans greater than 80%. The cost may range from 1/2% to 1% per year and 14 months premium is collected in advance. This is coverage for the lender in case of default.
Tax Impounds If the new loan is going to have an impound account, the lender will require from 2-10 months taxes to be deposited, depending on the time of year. Note: if taxes are prorated, buyers total charge for taxes should equal about six months taxes.
Escrow Fee These fees range from $750-$2500, depending on the sales price. In some counties its customarily paid by the seller, in other counties the buyer pays, while in others it may be customarily split. Remember though, everything is negotiable.
Negotiating Fees The fees listed above are examples and they may vary greatly in your areas... and with the passage of time.
Most of the fees are considered buyers non-recurring closing costs. Some of the fees are fixed while others are negotiable.
You should negotiate with the other party in the transaction to pay some or most of these costs!
A good close starts with a properly structured deal. It is quick and easy to create the proper documents with this innovative software....
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Thanks for your help!
Until next time - Go Forth and Prosper!
Mark Walters~
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