Home Buyer Closing Costs
The most important question a first time home buyer asks is "How much home can I afford
?" A home buyer needs to know the maximum price of homes that they can be looking at. Smart Miami home buyers know that there are also closing costs involved in the purchase of a house. Your team of professionals, including your lender, your attorney and your real estate agent should be able to ensure that the only surprises at closing are pleasant ones.
Following are typical closing costs that may be associated with your property purchase. These costs can be state specific, and even county specific, so be sure to talk with your lender about what costs apply to you.
Lender Fees - Fees will vary by lender, so in addition to shopping for the best rate for a loan, you should also pay attention to closing costs. The fees that might be assessed by your lender can include:
Underwriting fee
Administrative fee
Points (cost to buy down the rate)
Flood certification fee (to determine if the property is located in a flood zone)
Tax collection fee (to make sure they are notified of property taxes due and paid
Origination fee
There are additional closing costs that you will not pay to your lender but are closing costs nevertheless:
Appraisal: In almost all cases, an appraisal will be required to determine, as accurately as possible the real value of the property you are purchasing.
Credit Report: All lenders will pull a credit report. Most lenders require what is known as a "tri-merge report." The charge for this report is minimal and will be expected to be paid up front, in most cases.
There are also charges assessed by a Title Company or Transfer Agent, in addition to special fees that may be charged by your city, county and state.
Deed and Mortgage Documentary Stamps: Documentary stamps may be charged for recording the deed with the county. A second set of documentary stamps could be assessed for recording the mortgage.
Intangible Tax: The actual mortgage is considered intangible property for which there is also tax, called an Intangible Tax. This tax for the mortgage is assessed similarly to the doc stamps, except that it is calculated on the loan amount.
Recording Fees: The County assessor charges you for each page of the documents needed to record your home purchase.
Title Insurance and Escrow Fees: Title Insurance protects you and the lender to guarantee clear title to the property at the time the loan closes. The Title Company will also very likely charge an escrow fee to pay for their services. Also, expect a government lien search, and costs for specific title insurance endorsements that the lender may require.
In some states, an attorney may be involved in the closing process, instead of, or in addition to a title company.
In addition to closing costs, there could be other charges that are known as "pre-paid" expenses. These can include property insurance, property taxes, and accrued interest.
You will be furnished a Good Faith Estimate of all closing costs by your lender, within 3 days of applying for your loan. As a general rule, you should expect your total closing costs to average between 1% - 3% of the total loan amount.
by: Stephen Daniels
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