Closing Fees and What You Should Know
We’ve grouped the fees as follows:
These fees include the appraisal fee, survey fee, credit report fee, tax service fee, insurance fees, flood certification fees, and courier/mailing fees. Yes, there can be many! Third-party fees are collected from you and passed onto the person who performs the service. For example, appraisal fees are passed onto the person who did the appraisal on your new home. Legal fees are passed onto the lawyer who did the title insurance or coordinated the closing. Occasionally you’ll see a difference in these fees depending on who the lender uses to obtain these services.
Taxes and other Fees that You Cannot Avoid
Some fees cannot be avoided, including state/local taxes and recording fees. If the lender does not bring it up, do not assume that you will not have to pay it. Discuss these fees to get the complete picture of what you need to pay for the closing.
Fees such as document preparation, points, and loan processing fees are submitted by the lender and will hopefully provide you with the lowest rate possible. These types of fees can vary from lender to lender. It pays to compare these fees.
You may be asked to prepay some items at closing that will be due in the future. These fees are sometimes referred to as prepaid items.
One of the more common advances is defined as "interest due at closing." All our mortgages have payment due dates of the 1st of the month. If your loan is closed on any day other than the first of the month, you'll pay interest from the date of closing through the end of the month. For example, if your loan closes on February 15, we will collect interest to cover February 15 through February 28. This interest is prorated. This also means that you won't make your first mortgage payment until April 1 because the lender collected sufficient to have that March 1st payment. This advance payment of interest does not vary from lender to lender
If an escrow account is established (say for homeowner’s insurance or real estate taxes), you will make an initial deposit into the escrow account at closing so that sufficient funds are available to pay the bills when they become due.
Most lenders require that you purchase home insurance if you borrow a large amount of money to purchase your home. You usually need to pay the first year in advance prior to closing on your loan.
If you have any questions regarding these fees, please feel free to reach out to our Mortgage team.
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