Closing Cost Term Guide

Most of us aren’t familiar with all of the fees and expenses that come with buying a home. And sometimes just hearing all of these terms makes you feel like your real estate agent is speaking another language. But, we don’t want you to feel uncomfortable with the process. We want you to be able to understand the entire process from start to beginning. That’s why today, we’re going to go into an in-depth discussion about what each of the fees mean to you as the homebuyer. It might not be interesting, but it is very important. So, are you ready?

Mortgage Fees

When you apply for a mortgage, you will different types of fees noted on your application. Here is a breakdown of those fees.

Property Appraisal: Just as you have hired someone to do a home inspection, you must also hire someone to come out and do a property appraisal on the home you are attempting to buy. The property appraiser will walk through the house and property you buying in order to determine its actual market value. A house may not be sold for more than its appraised price. Therefore, f the appraisal comes back less than the buying price, the homeowner will be given the opportunity to negotiate the cost of their house.

Loan Origination Fee: This is the biggest fee that you will see on your mortgage. The amount of this fee goes directly to lender. To put it simply, it is the expense the lender is charging to generate your mortgage.

Application Fee: This fee is pretty self-explanatory, but let’s talk about it anyway. Most mortgage companies will charge you a fee to process your loan application. After the loan officer receives your payment they will process your mortgage application.

Card Reporting Fee: When you apply for your mortgage, it will be necessary for the mortgage company to determine your credit rating. They do this by running a credit check. Therefore, more mortgage companies will charge you a credit reporting fee.

Basic fees

Downpayment:
This is the most likely the largest fee that you will be responsible for during the home buying process. Typically, homeowners will be asked to put down anywhere from 3-5{16e476496f5f3a73cb19f20a476d08f8bca71b0bf9338242f1d2bf6ed337f382} of the sales price of the home.

You will bring your downpayment in a form of a certified cashier’s check on the day of your closing.

Home Inspection Expense
While this isn’t a “fee” per say, the home inspection is an expense that you will have to pay. The home buyer is responsible for hiring and arranging an inspection of the home that they are attempting to buy. Depending on how in depth you would like your inspection to be, you should expect to any anywhere between $200-$500.

If you have any more questions about fees, be sure that you check out our First Time Homebuyers Video Series. And for any other specific questions, never hesitate to reach out to us personally.