Wait… I have to pay closing costs?

I thought I should take a few minutes to explain the closing costs that are involved with a new mortgage. The process of obtaining a mortgage and buying a home is pretty detailed and there are many people and services involved in the transaction. I’ve broken down a few of the fees so you can better understand what the closing costs are paying for.

The origination fee, simply stated, is the fee the mortgage lender is charging the purchaser for the preparation of the mortgage loan’s documentation. You would pay points at closing if you have chosen to reduce the interest rate on your mortgage upfront. The total amount paid for points varies from loan to loan and from one financial institution to another.

The appraisal fee is the fee charged by an approved provider to provide an appraisal of the value of the property at the beginning of the mortgage process. We will collect a check from you at the initiation of the mortgage process for the appraisal. We file that check until the loan process is completed then either shred it or give it back to you. The reason we collect the check upfront is it covers the appraiser’s fee in the event you do not proceed with the purchase of the home.

The underwriting fee will be charged by the investor for all paperwork presented to hold the loan. A wire charge is a cost transferred to the purchaser for wiring the money to the account. Flood certification is the certification demanded when the home is not in a flood zone otherwise, flood insurance coverage is needed. These are some of the items included in closing costs.

Once we receive your purchase contract, I will go over it with you explaining each section. Your original estimate should be fairly close to the final fees assessed. As always, give me a call or send me an email if you have questions.