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Closing Costs: What Are They And How Much Will You Pay?

Tuesday, February 8, 2022   /   by Bob Cowan

Closing Costs: What Are They And How Much Will You Pay?

Closing Costs: What Are They And How Much Will You Pay?

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A down payment is not the only thing you need to have when closing on your loan. Closing costs are expenses you pay the lender for the various services they provide for the approval of your mortgage.

Let’s dive into what closing costs are and how much you can expect to pay.

What Are Closing Costs?

Closing costs are processing fees and charges that you pay to your lender to cover the costs of services rendered for creating and finalizing your loan. These cover your home appraisal, origination and underwriting of a mortgage loan, taxes, real estate commissions, insurance premiums, and record filings to name a few.

How Much Do You Pay For Closing Costs?

Closing costs are usually about 3% to 6% of the price of your home. This means that a loan worth $200,000 can cost you between $6,000 to $12,000 in closing costs.

Buyers and sellers pay closing costs but the majority are usually shouldered by the buyer. You can negotiate with your seller to help cover closing costs.

Types of Fees With Closing Costs

Lenders will provide you with an itemized list of closing costs with your loan estimate. Here are some of the common fees and charges you can expect.

Appraisal Fee

This will amount on average is $600 which varies on the location and size of the home. Great news Freedom Choice Lending for a limited time for all purchase loans will credit the borrower up to $600.

Homeowners Association Transfer Fee

This fee covers the cost of moving the burden of HOA fees from seller to buyer. This ensures that the seller is up to date on their HOA dues.

Homeowners Insurance

Lenders usually ask for a year’s prepayment of homeowners insurance premium during closing.

Lender’s Title Insurance

This protects a lender if an ownership dispute or lien comes up that wasn’t found during the title search. You pay a one-time fee to the title company upfront.

Owner’s Title Insurance

Title insurance is optional but recommended. This policy protects you in case someone challenges your homeownership. Expect to pay 0.5% to 1% of the purchase price for your policy.

Origination Fee

This fee covers the lender’s administrative costs to process and underwrites your loan which is usually 1% of the loan amount.

PMI (Private Mortgage Insurance)

If you put down less than 20% your lender may require a PMI which means you may pay for the first month’s PMI payment upon closing.

Survey Fee

There are instances where you need to check property loans and shared fences to ensure a property’s boundaries. You pay a fee to a surveying company which costs around $300 to $500.

Author: Noah Manuel

  your home sold guaranteed, bob cowan, february 2022

Platinum Living Realty
Bob Cowan
120 Newport Center Drive
Newport Beach, CA 92661
DRE# 01970237

Based on information from California Regional Multiple Listing Service, Inc. as of April 14, 2024. This information is for your personal, non-commercial use and may not be used for any purpose other than to identify prospective properties you may be interested in purchasing. Display of MLS data is usually deemed reliable but is NOT guaranteed accurate by the MLS. Buyers are responsible for verifying the accuracy of all information and should investigate the data themselves or retain appropriate professionals. Information from sources other than the Listing Agent may have been included in the MLS data. Unless otherwise specified in writing, Broker/Agent has not and will not verify any information obtained from other sources. The Broker/Agent providing the information contained herein may or may not have been the Listing and/or Selling Agent.
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