What Are the Costs That Come With Your Loan?
Buying a home is a big and exciting step. It is also an expensive step! It seems that there is cost after cost when getting your mortgage. It helps if you have an idea of what to expect before you start the process. The fees that you pay for your mortgage are also called closing costs, which are the costs you incur when you close on your home.
Closing costs differ from state to state, but below is an estimate of what you are likely to pay for the different items you need to close on a house.
- Home Appraisal: Almost all lenders require you to get an appraisal to get a mortgage. Most lenders will require the payment for the appraisal upfront. Price will depend on the type of mortgage and the size of the property, but a rough estimate is $450-$650.
- Closing Fee: A representative from the title company will come to your closing to supervise the transfer of title, and you’ll have to pay for the service. This will cost you approximately $300 to $600.
- Credit Report Fee: Simply the fee to pull your credit. Approximately $25 to $50.
- Home Inspection: Home inspections are not required for all loans, but regardless if it is required or not, a home inspection is highly recommended. You pay this cost before the closing. Approximate cost $300 to $500.
- Lender’s Title Insurance: This cost is set by the state and depends on the size of the policy. The cost is usually 0.5% of the purchase price.
- Survey: If a survey is not existing, you will have to pay for one. Approximate cost is $350 to $500.
- Title Search: Checks for any liens or problems with the title. Approximate cost is $300 to $600.
The mortgage fees that you might have to pay:
- Application Fee: Sometimes bundled with the origination cost. Approximately $100.
- Attorney Fee: Not every state requires a lawyer at closing. Approximate cost is $150 to $500.
- Flood Certification: Lender checks to see if property is in a flood zone. Approximate cost is $5 to $10.
- Homeowner’s Title Insurance: Not required, but recommended. Will protect you in case any liens were missed. Approximately $1,000 on average.
- Origination or Processing Fee: Fee to cover the cost of preparing your mortgage. Does not apply to all mortgages. Approximately $300 to $1,500.
- Points: These are fees paid to lenders to reduce the interest rate of your loan. Fee is 1% of your total mortgage.
- Underwriting Fee: This is the cost from your lender for researching whether or not you are approved for your loan. Approximate cost is $400 to $600.
- Wire or Courier Fees: If you need to overnight anything or wire money, you will pay this fee. Approximate cost is $30 to $100.
You are paying a large amount of money for your mortgage. It is worth your time to shop around and see where the best deal is. Being prepared for the expenses will help you deal with paying for them. Happy house hunting!