Closing Costs…What are they? As a buyer am I responsible for them? On average, how much are they?
These are all questions we are often asked by buyers. Closing costs are funds, in addition to a loan down payment, which are paid at settlement. These include, but are not limited to:
- Origination Point – 1% of the loan amount. Used to compensate the broker or lender for their work.
- Title Insurance – Protects against past defects in title. Forged documents, undiscovered heirs, undisclosed liens.
- Appraisals: Performed by a third party licensed appraiser. Used to determine the market value of the subject property.
- Document Recording Fees – charged for the deed of trust and transfer fees.
- Other fees involved: loan application fee, credit report, inspection fee, tax service fee, processing fee, underwriting fee, wire transfer fee, and a document preparation fee.
As you can see, the list of closing costs is quite lengthy and can add up to several thousand dollars. The Real Estate Settlement Procedures Act requires that loan officers send applicants a Good Faith Estimate within 3 days of signing the loan application. The law has recently changed so that now the document is called a Loan Estimate. It is essentially the same thing. This is a close estimate of all the charges you will have when you get to the closing table.
At Nightingale Benefits, it is our goal to cover most, if not all, of these costs for you.