CLOSING COSTS EXPLAINED

What are some possible closing costs you may encounter when selling your home, and who pays for what?

Closing costs are often confusing. When you apply for your loan, you will receive a Good Faith estimate of these charges, as well as an explanatory booklet. The below is a mini glossary explaining the terms used.

Appraisal Fee: A one-time fee to pay an independent fee appraiser.

Credit Report Fee: A one-time fee covering the cost of the credit report.

Document Preparation Fee: There may be a separate fee covering the preparation of the final legal papers

Homeowners Fee: Some associations may require an upfront deposit or dues, as well as a fee to transfer their records from seller to buyer (transfer fee). These amounts vary for each association.

Loan Discount: A one-time fee to adjust the yield on the loan to what market conditions demand. (often called POINTS).

Loan Origination Fee: A one-time set up fee charged by the lender for their administrative costs.

Miscellaneous Title Charges: The title company may charge fees for items such as title policies,document preparation, recording fees,and a escrow fee.

PMI Premium: Depending on your down payment,you may have to pay an up front fee for mortgage insurance. Lenders may also require monies to be held by them in a reserve account.

Prepaid Interest: This is a per diem charge that will vary depending on the time of the month your loan closes.

Taxes and Hazard Insurance: Depending on the month your property closes, you may be required to reimburse the seller for property taxes.You will have to pay a year’s hazard insurance premium up front, and maybe required by the lender to put a certain amount for taxes and insurance in a reserve account. This account is held by the lender.

Who pays for what closing costs

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