Contrary to popular belief, closing costs don’t all go to your lender. For your own customized breakdown of what you need to pay for at closing, ask your banker for a Good Faith Estimate. In general, closing costs include the following:
- Appraisal ($225 – $450)
- Credit Report ($15 – $30)
- Closing Fee ($150 – $400)
- Title Company, Title Search or Exam Fee ($150 – $400)
- Survey Fee ($150 – $400)
- Flood Determination/Life of Loan Coverage ($15 – $25)
- Courier Fee ($30)
- Title Insurance (Lender’s Policy) (Varies – generally between $175 – $875)
- Title Insurance (Owner’s Policy) (Varies – generally between $175 – $875)
- Homeowners’ Insurance (Varies – $300 and up)
- Buyer’s Attorney Fee (Not required in all states – $400 and up)
- Lender’s Attorney Fee (Not required in all states – $150 – $500)
Check out Closing Costs and Fees Explained for more details on how and why each portion is necessary.
Because of the costs mentioned above, mortgage companies need to ensure a commitment from the client before moving forward on a loan. To do this, deposits are often required to cover these costs when the client decides against the loan midway through.
So how do you get out of having to pay thousands upfront? Seller concessions are a set dollar or percentage amount of the purchase price that the seller agrees to pay you. In other words, you can agree to bid a little higher, but the seller has to pay your closing costs. This way, the amount you bid will of course be part of the loan, while closing costs are paid by the seller. For FHA loans, seller concessions can be up to 6% of the loan amount, so be sure to check and see if this option is available for your loan program.
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