As a buyer or seller you need to be aware that the closing costs in any transaction can represent anywhere from 1-8% depending on many factors. A good mortgage broker will explain the expenses related to any loan costs, to a buyer, but there are many other costs that your broker may not include such as whether to buy a home warranty, the cost of a septic inspection and other specific inspections that a property may require. On the seller's side most people think of the real estate commissions, typically 6%, but there are other expenses as well such as potentially retrofitting plumbing fixtures not in compliance with current law. Having a Realtor who is well versed in the various expenses involved helps clients prepare ahead so that sticker shock of unexpected costs can be avoided as much as possible. Below is just a sample of regular and potential expenses.
l Administration fee l Appraisal fee l Appraisal review fee l Closing/escrow/settlement fee l Courier fee l Credit Report l Document preparation l Flood certification fee: Verifies if property is in a federally designated flood zone. l Flood monitoring: Monitors flood zone remapping. l Home inspection, Home warranty l Homeowner’s association transfer fee l Homeowner’s insurance: Usually required to pay the entire first year’s insurance at closing. l Homeowners insurance impounds: Two months’ worth of premiums. l Lender’s Inspection fee: On new property, verifies construction is complete with carpeting and flooring installed. l Loan discount: “Points.” l Loan Origination Fee l Loan tie-in fee: Closing agent’s services dealing with the lender. l Mortgage broker fee l Mortgage insurance impounds l Mortgage insurance l Notary fees l Pest inspection l Pre-paid interest: Accumulated interest between closing day and first payment. l Property tax impounds l Recording fees l Sub-escrow fee: Title insurance company charges this. l Tax service fee: Monitors payment of property tax. l Title insurance: For clear title to the property. l Underwriting fee l Up front mortgage insurance premium l VA funding fee: Paid to the VA for guaranteeing your loan. l Warehousing fee: The cost of a “warehouse” line of credit. l Wire transfer fee: Funds transfer from one account to another.