CLOSING FEES AND COSTS EXPLAINED
Buying a new home is a super exciting and super busy time. There are many details and decisions involved in this purchase and, of course, loads of expenses. A typical homebuyer, depending on the type of the loan and other factors, might expect to pay between 2-5% of the purchase price for closing costs. To help you prepare, here is some useful information about fees you may expect to pay at closing.
What do closing costs mean?
Closing costs include all fees and charges incurred for officially transferring a property from one owner to another. The process is complicated and requires input from many third party professionals. Your closing costs help cover the work of these professionals, as well as certain local taxes and fees.
How high will my closing costs be?
There is no single answer to the question of how much closing costs will be, but they typically range between 2 percent and 5 percent of the property value. The final amount depends on local laws and taxes, the service fees of the professionals used, various factors involving your home and property and the lender you choose. Your closing costs should not come as a surprise to you on closing day. We will provide you with a "loan estimate" or a detailed list of your anticipated closing costs, within three days of your mortgage application.
What kind of charges can I expect as part of my closing costs?
Each lender may handle their fees or costs differently. Some lenders bundle everything into an origination fee, and others break things out. While each mortgage loan is unique, you can expect to see the following charges appear in your estimate from Selfreliance FCU:
- Lender fees: financial institutions will typically charge an origination fee (on average, about 1% of the total loan) and a one time application fee (usually around $300) during the loan approval process. At Selfreliance FCU, we waive most of the origination fees, and you can expect to pay two or three times less than with other lenders (refer to sample comparison below).
- Appraisal fees: paid to a professional property appraiser for assessing the home's fair market value.
- Title fees: cover a title search, insurance, and settlement
- Transfer taxes: cover transferring the title from the seller to the buyer.
- Escrow deposit: we will create an escrow account to ensure you have the funds available to pay recurring fees like property taxes and homeowner's insurance in the future. At closing, you'll be expected to seed that account with up-front cash.
- Mortgage insurance premiums: for a traditional mortgage with less than 20% down payment, we may require private mortgage insurance and payment of the first month's premium at closing.
- Prepaid interest: Homebuyers should expect to pay the interest on the first month's mortgage payment at closing.
Does Selfreliance FCU charge less closing fees than other lenders?
While you can't avoid to pay third party fees, such as title fees, attorney's fees, or the appraisal fees, you can and should ask questions about the fees that your lender may charge for processing your mortgage. At Selfreliance FCU, we constantly monitor our competitors and provide our members with a much lower lender fee. Take a look yourself, the calculations are based on a home value of $250,000:
| Description | Selfreliance FCU Rates & Fees |
Example: Credit Union Rates & Fees |
Example: Bank Rates & Fees |
|---|---|---|---|
| Discount Points | $0 | $0 | $900.00 |
| Credit Report Fee | $0 | $59.00 | $18.00 |
| Flood Certificate Fee | $0 | $14.00 | $0 |
| Processing Fee | $250.00 | $250.00 | $1,200.00 |
| Tax Service Fee | $81.00 | $70.00 | $80.00 |
| Administrative Fee | $325.00 | $500.00 | $0 |
| Verification of Employment Fee | $0 | $104.00 | $0 |
| Underwriting Fee | $375.00 | $275.00 | $0 |
| Closing Pre Fee | $0 | $100.00 | $0 |
| Total Lender Fees | $1031.00 | $1,372.00 | $2,198.00 |
Based on website information from local financial institutions on 06/17/2022 for a primary residence refinance with LTV 80%. Title, recording, and other fees may apply
*Mortgages available only for the following owner-occupied properties: single family residences, qualified condominiums or multi-family structures with no more than four units and up to 80% LTV. Mortgages with down payments as low as 5% (up to 95% LTV) are available only for the following owner-occupied properties: single family homes and multi-family structures up to 2 units and will require private mortgage insurance (PMI). Subject to approval of application. The stated Annual Percentage Rates (APRs) are all based on $100,000 mortgages, except for the Fixed Rate Jumbo Portfolio Mortgages which are based on $726,200 mortgages. For example, a $100,000 30 Year Fixed Rate Purchase mortgage with an 80% LTV will have a 6.653% APR and the repayment schedule will be 360 monthly payments of approximately $632. Monthly payment amount does not include any property taxes, and/or insurance premiums; the actual payment will be greater when such items are included. Mortgages available only to members and only in designated geographic locations. All Selfreliance FCU loan programs, rates, terms and conditions are subject to change at any time without notice. Not all applicants will qualify for the lowest Annual Percentage Rates (APR) shown. Annual Percentage Rate (APR) is based on an assessment of individual creditworthiness, occupancy and/or property type, and our underwriting standards. Please call our mortgage department toll free at 1.888.222.8571x283 for current offers, rates and terms.
