When you purchase or sell a home, it’s going to cost something. And you ought to plan on it costing more rather than less.
In addition to the lender’s fees, the other closing costs include title fees, recording fees, city, county and state transfer taxes, as well as other expenses.
Here’s a detailed look at all of the closing costs you might have to pay when you buy a home, and how much cash you’ll have to shell out. Remember, not every charge will apply to your deal and your fees may be higher or lower than the range I’ve provided depending on where you live and your particular purchase.
Lender’s points, loan origination or loan service fees. These usually run 0 to 3 percent of the loan, or more. Lenders will typically earn 1 percent in fees, but you can opt to pay more than that in order to bring down the interest rate of your loan. If you decide to pay nothing in fees, you can expect to have a higher interest rate.
Loan application fee. Typically runs $0 to $500.
Lender’s credit report. Expect to pay $25 to $85 or more for each credit report pulled. It’s possible that the lender will pull a credit report just before you close to make sure nothing has changed.
Lender’s processing fee. This can run $75 to $400.
Lender’s document preparation fee. A fee for preparing the documentation needed in the closing, $50 to $250, or more.
Lender’s appraisal fee. The lender will hire an appraiser to determine whether your property is worth what you’re paying for it. This will cost $225 to $400, or more, depending on the size of the property.
Prepaid interest on the loan. The interest due on your loan is paid per day until the end of the month in which the closing occurs. If you choose to close on the 1st of the month, you’ll have to come up with 30 days of prepaid interest. If you close on the 30th, you might only need 1 day’s worth of interest in cash at closing.
Lender’s insurance escrow. This will cost 15 to 20 percent of the cost of your homeowner’s insurance policy for one year. If the policy costs $1,200 per year, you can expect to come up with as much as $240 at closing, unless you have not paid for the policy, and then you’ll have to pay it all at the closing.
Lender’s tax escrow. If you have a tax escrow, you’ll need to come up with about 33 to 50 percent of the annual property tax bill at closing. (After closing, you will begin to make regular real estate tax and insurance escrow payments as part of your monthly mortgage payment.)
Lender’s tax escrow service fee. This $40 to $90 fee is paid to set up the tax escrow.
Title insurance cost for the lender’s policy. Expect to pay $150 to $500 or more, based on the dollar amount of the house you purchase. In some parts of the country, the seller picks up most or all of the cost of title insurance, which is why when you refinance, you’ll find that the cost of title insurance seems to skyrocket.
Title insurance cost for the buyer’s policy. If you choose to buy a buyer’s policy, and I think you should, the cost will run $150 to $1,000 or more.
Special endorsements to the title. These can cost $100 each, or more. Depending on the type of property you are purchasing, the lender can require that you add special endorsements to the title, such as an environmental lien endorsement, adjustable rate mortgage endorsement, or even a condominium endorsement.
Unpaid house inspection fees. These can run $250 to $400 or more.
Title company closing fee. They need to make money, too. This can run from $200 to $500 or more.
Recording fees, of deed or mortgage. Expect to pay $25 to 75 each.
Local city, town, or village property transfer tax; county transfer tax; state transfer tax. These charges from municipality to municipality, and are usually either a flat fee or are based on the sales price of the house. In Chicago, the buyer picks up the city transfer tax, a hefty $3.75 per $500 of sales. The range is generally nothing to $10 per $1,000 of sales price.
Flood certification fee. A fee you’ll pay for the lender to determine whether the home you’re buying is located in a flood zone, $10 to $50.
Attorney fee. If you need an attorney to help you close your deal, the flat fee rate generally starts around $400.
Condo move-in fee. A building charge that can run from nothing to more than $500.
Association transfer fee. Often required for condominiums and town house buyers, this fee can range from nothing to more than $200.
Co-op apartment fees. Often charged for the transfer of the shares of stock in a co-op transaction, the fees can range from $50 to $200 or might be based on the purchase price.
Credit checks for condo and co-op buildings by the board. These can run anywhere from $25 to $75 per credit check.
Move in fees. Some condominium associations will charge you a deposit for the right to move into the building. In some cases the deposit is refundable and in others, it is an outright fee paid to the association. These fees can run from $50 to $500.
Next week, I’ll take a look at closing costs sellers might have to pay.
If you’ve come to this article through a search engine, take a look at our closing costs for buyers updated June 2009.