Beyond Down Payment:
What Will My Mortgage Closing Costs Be?
When I first speak with new mortgage clients … especially those that are first-time home buyers … there's often a bit of confusion regarding what costs will be involved in the obtaining of their loan.
After I've spent some time with them detailing the costs of their loan, I find that many say they were surprised to find that they’ll incur additional costs beyond the funds needed for down payment. (Unless, of course, they’re using a 0% down payment program).
Many had incorrectly assumed that their down payment was all that was needed to buy. But it's a fact. There are also several fees, beyond that of a down payment, typically involved in the financing of a home.
So what are those Costs? They include, but are not limited to:
- Credit Report
- Application Fee
- Flood Certification
- Origination Fee
- Mortgage Interest
Title Company Costs:
- Settlement /Closing Fee
- Owners Title Policy
- Lenders Title Insurance
- Recording Fee(s)
- Tax Service Fee
- E-Mail/Wire Fees
Third Party Costs:
- Attorney Fees (if applicable)
- Home Inspector
- Home Owners Insurance
- City/County/State - Real Estate Transfer Tax Stamps
- Condo Association Documents (if applicable)
- Possibly More, if/when applicable
Now please note: Costs do vary from Mortgage Lender to
Mortgage Lender. The same goes for title companies and third party vendors involved in the transaction.
Also: Each property location being considered for purchase, (state, county, city, subdivisions, etc.) can mean different costs paid at the time of Closing (Monthly Mortgage Payments can also differ even if Sales Price remains the same). That makes it virtually impossible to list and identify specific costs within this article.
To be fully informed: Borrowers should take steps to educate themselves regarding cost variations that may exist between the homes considered for purchase.
The best source for this needed information? Your Loan Originator and/or Realtor.
Since the costs listed above are paid in addition to any Down Payment funds needed, Borrowers are asked to show they have the ability to cover their Closing Costs with proven money/funds/balances in accounts ... OR request that their Seller offers a Closing Cost Credit to pay for all, or a part of, their Borrower’s costs due at Closing.
It's important to note that some states require the Seller to pay or reimburse a Borrower for certain title company charges, and/or real estate taxes, and Transfer Tax charges. Again, the specifics regarding this are tied to the location of the home being purchased.
My advice regarding Closing Costs is always this:
Ask ALL your questions and gain the information you need BEFORE you make your offer ...
And if you find that you’re working with an Originator or Realtor that is ill-prepared to address your questions or unwilling to provide you the information you need? Move on. Only work with professionals that will.
Because only then will you be thoroughly prepared to make a wise decision regarding your choice of home and its financing …
* Hoping to Buy or Refinance a home in Chicago or elsewhere in the Chicagoland area? Contact me! I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
I can be easily found at:
Mortgage Originator - NMLS #216987 - IL Lic. #031.0006220 - WI Licensed
Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the greater Chicagoland region, including: The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, and elsewhere within IL & WI.
Referrals are Welcomed!