Understanding the Closing Costs Associated with Buying a New Home – RISMedia
Buying a home can be fun, exciting, and at times stressful – and that’s just finding the perfect home. The credit process is an entirely different process that can seem like a foreign language. Most buyers just want to know the fees and costs associated with their new home purchase or refinance. The fees shown in the Good Faith Estimate can be difficult to understand, but can be broken down into five sections. Here’s how you can explain it to your buyers:
1. One-time costs associated with the lender
Lending Fee, Loan Discount, Assessment Fee, Credit Report, Lender Inspection Fee, Mortgage Broker Fee, Tax Service Fee, Flood Certification Fee, Flood Monitoring Fee, etc.
2. Lender’s Fees
Can vary widely depending on the lender and is not dependent on the cost of the loan.
– Document creation, subscription fee, management fee, evaluation fee, storage fee
3. Items to be paid at the time the escrow account is closed
– Prepaid Interest, Home Insurance, VA Financing Fee, Mortgage Insurance Premium Prepayment (UFMIP), Mortgage Insurance
VA funding fees and UFMIP are typically included in the total loan balance.
4. Paid-up reserves
Funds in a deposit account are your funds that the lender uses to make payments on your bills when they are due.
If you have minimum payments or your mortgage lending value is greater than 80%, lenders may require pledge escrow accounts to hold funds for homeowner, property tax, mortgage pledges, etc.
5. One-time costs not associated with the lender
– Acquisition / trust / accounting fee, title insurance, notary fee, admission fee, pest inspection, house inspection, house guarantee
It is common practice in some markets to ask the seller to pay some or all of the closing costs when purchasing a home. Some simple rules to keep in mind with the different types of credit:
– With VA loans, you can ask the seller to pay anything, which means the buyer does not make a down payment and does not pay any closing costs.
– For FHA loans, almost all costs can be borne by the seller, but the buyer must invest at least 3% in the home / closure costs.
– Some refinancing rates include the closing costs and prepayments in the new loan amount, so little or no out-of-pocket expenses are required to close the deal.
For more information on closing costs, loans and refinancing, see REeBroker Group Loans. For information on borrower support, see REeBroker Group Pre-Approval. We have experience with MLOs that are brand new and / or have been in the industry for years! We are there for you and your customers.
Real Estate eBroker Inc (DBA REeBroker Group) is an Equal Opportunity Lender and an Equal Housing Lender. NMLS # 297152 DRE # 01522411