The following items represent closing cost:
- Mortgage points
- Mortgage an application fee
- Flood determination fee
- Title charges ( which may include a settlement fee, title search , title examination, deed preparation, notary fee, attorney’s fee and title insurance)
- Mortgage loan fees such as origination fee, appraisal fee, credit report fee, tax service fee, underwriting fee, document preparation fee, wire transfer fee
- mortgage broker fee if you are working with Mortgage broker, however if you are taking Federal Housing Administration (FHA loan, FHA will charge you fee, same goes with Veteran Administration Loan and Rural Housing Service
- Appraisal fee
Who Pays the Commission?
Usually, the total commission is always paid by the seller at the settlement table, where the fee is subtracted from the proceeds of the home sale. However, in a sense, the buyers are paying the commission because they’re paying to buy the house and the sellers have taken the real estate agent commission into account when determining a listing price. The commission is split at the settlement table between the listing agent’s brokerage and the buyers’ agent brokerage; then the agents themselves are paid by their brokers.
Majority of population In United States obtain a mortgage loan to pay for home purchase. Usually lender charge Loan origination fee to initiate mortgage loan. This fee covers the lender's cost of obtaining financing and administration for your loan. The fee is usually calculated as a percentage of the loan amount but can also be in a flat dollar amount. It has become more common for an application fee and, possibly, other up-front charges like an underwriting fee either to take the place of or be in addition to an origination fee. Each lender and each loan program a lender offers will have different front-end charges.
Loan Discount (points)
These are actually prepaid interest on the mortgage loan. The more points you pay, the lower the interest rate on the loan. Borrowers typically can pay anywhere from zero to 3 points, depending on how much they want to lower their rates. This kind of point is tax deductible. When discount points are paid, the bank collects a one-time fee at closing in exchange a lower mortgage rate to be honored for the life of the loan. The banks consider this payment to be "prepaid mortgage interest" and, because mortgage interest can be tax-deductible, discount points sometimes come with tax breaks. As a rule of thumb, paying one discount point will lower your mortgage rate by 0.25 percentage points. Paying two discount points, however, will not always lower your rate by 0.50 percentage points, nor will paying three discount points always lower your rate by 0.75 percentage points.
The appraisal fee pays for somebody to do an appraisal on your home. An appraisal is an investigation into the value of your home. The appraiser gives the lender an idea of how much your home is worth. In case you default on your loan and the lender has to take possession of it, they want to know that they can sell it without losing too much money. An appraisal is based on information that’s similar to the information Real estate use for a comparative market analysis, including the specifics of your house such as square feet, number of bedrooms, number of bathrooms, the location and age of the property and interior improvements. These facts about your home will be compared to other homes that the appraiser considers comparable to come up with your home value.
Mortgage Insurance Application Fee
There are often fees associated with processing an application for mortgage insurance. Some private mortgage insurers waive the application fee. This line of the HUD-1 may be used for other fees when the borrower is seeking an FHA-insured or VA-guaranteed loan.
When the down payment is less than 20 percent of the purchase price; you are required to carry Private Mortgage Insurance, PMI, to protect the lender should you default on your loan. The lender charges a variable fee to process the application.
Mortgage Broker Fee
This fee covers the costs of services of a mortgage broker if one is engaged by the borrower to help them shop for mortgage financing. Mortgage brokers typically present the borrower's application to a variety of funding sources before helping the borrower make their final selection. The benefit of using mortgage broker is that they have regular contact with a wide variety of lenders. The alternative to working with a broker is to call up dozens of lenders and compare their mortgage terms and rates on your own. A broker saves you the time and headache of having to do that.
Yield Spread Premium (YSP)
This is a fee that the funding lender may pay directly to the mortgage broker or other third-party loan originator. This fee is for securing a borrower on behalf of the funding lender at rate and terms agreed upon which may be higher than what is called "at par." The fee is sometimes called a "Par-Plus Pricing" fee. While this fee is not paid by the borrower (it typically is shown as "POC" by the Lender"), it must be shown on the HUD-1 if the mortgage broker is receiving such compensation.
Government recording and transfer charges
- Courier fee: Charged if a courier picks up and delivers documents.
- Lead-based paint inspection: Covers the cost of evaluating lead-based paint risk.
- Pest inspection: Depending on location, a termite or other pest inspection may be required.
- Radon test: Covers the cost of testing for the presence of radon gas, which can be a problem in some parts of the country.
- Recording fees: Average about $100. This covers getting the sale recorded in the public record.
- Survey: About $1000 for a survey of the property boundaries.
- Transfer taxes: This is a fee, usually collected by the state, for transferring the title of the property within a certain jurisdiction. The fee varies.