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What
Are Closing Costs? Why Do You Pay Them?
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.We
offer Texas Mortgage Loans
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| Many people are involved in the process
of buying or refinancing a house. They include the Realtor®,
lender, mortgage brokers, appraiser, insurance company, inspectors, title
company, your local government and your attorney. Each of these
parties charges fees for their services in processing and funding your
loan. |
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Some
of the fees described below may not apply to your type of
mortgage loan. |
 | Appraisal Fee
- This fee is charged at loan application and is payment
to an appraiser for researching the fair market value of the
property. The appraiser compares the the property to other
similar homes in the neighborhood which have recently been sold and
generates a detailed report for you and the lender. |
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| City/County
Transfer Tax - Taxes
charged when a property transfers ownership. Similar to a sales
tax, not to be confused with your local recurring property tax. |
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| County Property
Taxes - Taxes billed for the ownership of
real property. These taxes are generally
prorated and sometimes result in a credit from the seller when
purchasing a property. If you will have an escrow or impound
account, several months worth of taxes may be collected from you at
closing to deposit in your escrow account. |
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| Courier Fee
- Paid to a courier for delivery of documents from the
lender or to express payoff of an existing loan on the property. |
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| Credit Report
- This fee is charged at loan application to provide the
lender with a report detailing a borrower's credit history. |
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| Escrow Waiver
Fee - If you don't want an escrow account and you want to
pay your own taxes and insurance, most lenders will charge you a fee for
waiving escrow, usually .25 to .375. |
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| Flood
Certification Fee - Paid for a flood
certification which states whether or not the property is located in a
flood zone. If so, the lender will require you to purchase flood
insurance. |
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| Hazard
Insurance - (Homeowner's Insurance) If you
are purchasing the property, the lender will require you to pay the
entire first year's premium. If you will have an escrow account,
at least two additional months will be collected at closing to deposit
in the account. |
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| Interest to End
of the Month - Lenders charge interest from the
date the loan is funded until the first day of the following month. |
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| Inspection Fee
- This fee is charged for inspection of a property after
an appraisal. It is usually done if you are buying new
construction and the lender wants to be assured the house is
completed. |
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| Mortgage
Insurance Premium - Private Mortgage Insurance (PMI)
may be required on certain loans, generally if you are putting less
than 20% down. |
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| Origination Fee
- A fee charged by the lender for making a mortgage on
the property. This fee usually is computed as a percentage of
the loan amount. |
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| Pest Inspection
- Fee charged for a termite inspection of the property. This may sometimes be waived, but some lenders may require it. |
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| Points -
Also known as discount points. A one time fee charged by the
lender to lower the interest rate normally charged. Each point
is equal to 1% of the mortgage amount. |
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| Processing Fee
- Fee charged to pay for the processing of the paperwork
for your loan. |
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| Recording Fees
- Fees paid to your county which records documentation
of your legal ownership of the property, such as the deed, mortgage,
note, etc. |
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| Settlement or
Closing Fee - A fee paid to the title company or
attorney for
handing all the financial transfers and payments associated with the
transaction. |
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| Tax Service Fee
- A fee charged for researching county tax records to
confirm that the taxes are paid in full and up to date. |
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| Title Insurance
- Guarantees that your property has no other lien or
claims against the property. Your lender requires that you
purchase title insurance. |
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| Title
Insurance Policy - An actual insurance policy obtained
through the title company that guarantees the ownership of the property.
May be purchased by the seller or the buyer and is required to be
purchased even for refinances. |
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| Underwriting
Fee - The lender's fee for reviewing your loan
application for approval. |
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| Wire Transfer
Fee - When you purchase or refinance, funds will
be wired to fund the transaction. The receiving account charges a
nominal fee for the wire transfer. |
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