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Closing Costs - Loan Related


When you purchase a home and will be taking out a mortgage, most lenders will have additional costs and fees associated. Here is a breakdown of those fees:

Loan-Related Closing Costs:
Loan Origination Fee
This covers the administrative expenses in setting-up and processing the loan. The loan origination fee may be a percentage of the mortgage amount.

Points (optional):
An option for the home buyer is to pay points to lower the interest rate at which the loan will be repaid. Each point equals 1 percent of the mortgage amount. For example: on a $150,000 loan, 1 point would equal $1,500.

Appraisal Fee:
The fee for having the house appraised may be incorporated into the closing costs or payment may be required by the lender at the time the loan application is submitted. Most lenders these days require the Buyer to pay the appraisal fee at the time of ordering, also known as POC (paid out of closing). Appraisal fees vary but should normally run between $350.00 - $500.00

Credit Report:
The lender uses a credit report to determine the creditworthiness of the loan applicant. This fee is often paid when the loan application is submitted.

Interest Payment:
Typically the buyer is required to pay interest on the mortgage loan to cover the time between the closing date and when the first mortgage payment period begins. For example: If closing is on May 15. Your first monthly payment begins to accrue interest on June 1 with your first mortgage payment due July 1. At closing an interest payment covering the accrual period between May 15 and May 31 may be required. FYI - Mortgage interest is paid in arrears!

Escrow Account:
At closing a payment may be required to fund the escrow account if the lender is paying home insurance, property taxes and/or other expenses out of the escrow account.

If you should need assistance or have any additional questions, please contact Joe Bornstein, 877-333-2811 or joe@rockspringsrealty.com