Closing Costs With Your Mortgage
When applying for a mortgage, it is important to understand that you are going to be responsible for paying costs associated with it. The fees are known as closing costs and can add up quickly.
If you have never applied for a mortgage before, you may be under the impression that it is a simple scenario where a lender gives you a big chunk of change and then expects a monthly payment for the rest of your life. In fact, the lender is going to want some money paid up front. This money comes in the form of closing costs and they can accumulate pretty quickly. While closing costs vary from real estate deal to deal, here are the ones you can expect to run into.
Lender’s Fees can be a harsh wake up call when it comes to closing cost. A lender is going to charge you fees for the origination of your loan and they can be very high. The fees can be attributed to process, underwriting, credit checks and a host of odd little tasks. They can add up quickly to thousands of dollars, so make sure you get a written quote from the lender before applying.
Appraisal Fees are a near constant when it comes to closing costs. As the name suggests, these fees are paid to an appraiser who values the home you are going to purchase. Technically, the fees are not really closing costs because they are paid at the time of the inspection, but they are generally grouped as such when closing costs are discussed. The amount of the fee depends on the property and part of the country you are in. Fees of $300 to $600 are pretty typical.
Title and Escrow – These two fees are nearly always present in any real estate deal. Title refers to the title insurance a lender will require you to obtain. Escrow refers to an independent third party that will act as an agent to hold document and money and issue them as well per the escrow instructions agreed upon by the parties. The fees for title insurance depend on the property while escrow fees vary from area to area.
Impound Accounts are not per se a closing cost, but they are something you should be aware of. The exact nature of an impound account depends on the lender’s requirements. In loaning you money, a lender may require you to pay PMI, homeowner insurance premiums and property taxes in to an impound account. Obviously, these numbers can grow pretty large, particularly with property taxes. It is important that you gain a full understanding of what will be required of you in this regard as buyers can be cash poor after escrow and run into trouble trying to meet the impound obligations.
If it is your first time applying for a mortgage, don’t be startled by all of the fees mentioned above. The key is to educate yourself on what is required for your specific situation and then go into the deal with your eyes open.
Raynor James is with FSBOAmerica - free information on mortgage loans.
If you have never applied for a mortgage before, you may be under the impression that it is a simple scenario where a lender gives you a big chunk of change and then expects a monthly payment for the rest of your life. In fact, the lender is going to want some money paid up front. This money comes in the form of closing costs and they can accumulate pretty quickly. While closing costs vary from real estate deal to deal, here are the ones you can expect to run into.
Lender’s Fees can be a harsh wake up call when it comes to closing cost. A lender is going to charge you fees for the origination of your loan and they can be very high. The fees can be attributed to process, underwriting, credit checks and a host of odd little tasks. They can add up quickly to thousands of dollars, so make sure you get a written quote from the lender before applying.
Appraisal Fees are a near constant when it comes to closing costs. As the name suggests, these fees are paid to an appraiser who values the home you are going to purchase. Technically, the fees are not really closing costs because they are paid at the time of the inspection, but they are generally grouped as such when closing costs are discussed. The amount of the fee depends on the property and part of the country you are in. Fees of $300 to $600 are pretty typical.
Title and Escrow – These two fees are nearly always present in any real estate deal. Title refers to the title insurance a lender will require you to obtain. Escrow refers to an independent third party that will act as an agent to hold document and money and issue them as well per the escrow instructions agreed upon by the parties. The fees for title insurance depend on the property while escrow fees vary from area to area.
Impound Accounts are not per se a closing cost, but they are something you should be aware of. The exact nature of an impound account depends on the lender’s requirements. In loaning you money, a lender may require you to pay PMI, homeowner insurance premiums and property taxes in to an impound account. Obviously, these numbers can grow pretty large, particularly with property taxes. It is important that you gain a full understanding of what will be required of you in this regard as buyers can be cash poor after escrow and run into trouble trying to meet the impound obligations.
If it is your first time applying for a mortgage, don’t be startled by all of the fees mentioned above. The key is to educate yourself on what is required for your specific situation and then go into the deal with your eyes open.
Raynor James is with FSBOAmerica - free information on mortgage loans.
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Source: http://www.articlealley.com
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