Understanding Mortgage Loan Closing Costs
By Karen LawsonMortgage Credit Problems Columnist
Closing: Where Buying a Home Meets Getting a Mortgage
Not many of us can afford to pay cash for a home, so the processes of finding a home, making an offer, and getting a mortgage loan to pay for it typically occur in rapid succession. You can get caught up in the excitement of buying a home while your mortgage lender, title company, attorney and other vendors are charging you for their services, products, and guarantees. Here's a brief tutorial that can help you understand closing costs.
Yours, Mine, and Ours: What Are Closing Costs?
The processes of transferring title to your new home and originating your mortgage loan are conducted during the time between acceptance of your offer and when your mortgage documents are ready for recording. While the sale is taking place and your mortgage loan is being underwritten, a variety of fees and costs are incurred. These are charged by your lender and third parties including the title company or attorney conducting the closing as well as the recording office where your mortgage documents are made a matter of public record:
Lender Charges: These fees and costs are charged by your mortgage company in connection with approving and originating your mortgage loan. Lender fees and costs may include an origination fee, discount points, document fees, copying and recording costs, underwriting charges, mortgage insurance premiums, and credit report expenses.
Pre-paid Items: These aren't lender charges but are costs associated with home ownership and can include hazard insurance premiums, home owner association dues, and property taxes. If your mortgage lender will be paying your hazard insurance and property taxes, it will typically require at least two months of these costs to be prepaid at closing.
Title and Escrow Charges: These are charged by the title insurance company and or law firm conducting the closing. They can include professional fees, title insurance, charges for documents and searches, and the expenses for resolving title problems. These may include paying to release title liens or delinquent property taxes.
Vendor Costs: Miscellaneous charges including appraisal fees, inspections, and repairs.
A good way to approach negotiating closing costs is to ask the seller to pay all or part of the buyer's (your) costs. Who customarily pays what closing costs can vary depending on the property location. However, there is no reason you can't ask a seller to pay some or all of your costs as part of the negotiation process.
A Mortgage Closing Costs Calculator can be very helpful in walking you through the process - making it easier for you to understand the costs you'll incur for your mortgage.
In addition, shopping with different lenders and title companies can get you very different results when it comes to fees, and you can always request a better deal if you have something to use as leverage (although you might not get it). Always check with at least two companies to make sure you are getting a fair arrangement.
About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She holds an MA degree in English from the University of Nevada, Reno.
Share This Article:
 del.icio.us |
| |  Digg |
| |  Reddit |
| | 
|
| | | |
Other Recommended New Home Loan Articles
