Closing Costs
Virtually anytime you take out a loan, you’re going to have to pay some kind of closing costs. These fees are things that go toward paying the various professionals who perform services associated with the loan.
In the case of a mortgage loan there are many types of closing costs and fees that you will need to bring to the table in addition to your down payment.
Insurance
Home insurance may be included in your outlay at closing because the policy for your new home must normally be paid in full for a year’s worth of coverage in order for you to be protected if anything goes wrong from here on out.
You may also have to pay part of your mortgage insurance, if applicable.
Title Fees
These include your title search and examination fees, which pays the title company to research the property and make sure the title is free and clear. They will look for any liens, which are obligations placed on a property for things such as unpaid contractor work done to improve the property. The way the law works, liens are put on the property in question rather than its owner, which means that when a title transfers from one party to another, so do any liens currently on the title.
A title insurance fee covers you in the event that there is a lien on the property that was not found during the title search.
Loan Origination Fee
The Loan Origination Fee is a fancy term for how your loan officer gets paid. You may also be charged for the credit report the loan officer had to pull for you before she could pre-approve you for the loan in the first place.
Document Preparation Fees
The title company may charge additional fees to cover their costs in preparing the necessary paperwork to transfer the title, including notes or deeds.
Notary Fee
A notary public is someone who holds a license which allows them to personally vouch for signatures on a legal document. A notary must be present to witness the signing of some or all of the documents involved and thereby make official the fact that each signature belongs to the person it represents. You will be charged a fee for this service as part of your closing costs.
Attorney’s Fees
In cases where there are documents that need to be reviewed by legal professionals, this service is charged a fee as well.
Recording Fees
These are a paid service of the locality in which the property is located, and include the cost of the local clerk’s or government office’s recording the mortgage, the new deed, local and state tax stamps, and transfer taxes on the title.
Taxes
Based on the day of the year the closing date falls on, taxes will be worked out with the seller paying any unpaid amount from the start of the year until now, and you paying the remainder for the year.
POC
Any procedures performed such as the appraisal, the land survey, and the home inspection are noted and their costs included, unless you’ve already paid for them in which case they are marked POC (paid outside closing). You may also have the option to have other tests completed such as a pest inspection, lead-based paint inspection, or asbestos and radon testing.