The process of purchasing a home can be overwhelming if you are not familiar with all the steps and costs involved in a real estate transaction. The most common costs that tend to be overlooked by buyers and sellers are a bundle of fees called closing costs.

It is important to be aware and budget for these costs so you are not surprised on closing day and possibly fall short within your finances.

Below is a guide to some of the more standard costs that you may be faced with on closing day.

  • Loan Origination Fee or Points
    Fees charged by the lender for generating your loan.
  • Broker Fee
    These fees are occasionally combined into the Loan Origination Fee.
  • Credit Report
    Lenders may require this fee up front to obtain and review your credit history. (Approx. $21 - $60)
  • Appraisal Fee
    This fee is normally non-refundable and will vary depending on the value of the home.
  • Inspection Fee
    Fees paid to have a Certified Home Inspector evaluate the structural and mechanical condition of the home.
  • Title Search
    This search will provide verification that the seller owns the house you are buying.
  • Title Insurance
    This fee insures against losses as a result of any title defects.
  • Prepaid Interest
    To pay up the mortgage interest to the first of the following month.
  • Mortgage Insurance
    Insurance to protect the lender in the event that the borrower (mortgagor) is unable to repay the loan.
  • Administration Fee

Your real estate agent will be able to give you a rough estimate of some of these costs, however once you have applied for your loan, the lender will provide you with a Good Faith Estimate of what they anticipate the closing costs to be.

Familiarize yourself with these terms, ask your real estate agent questions and budget for these fees on closing day.

For more Home Finance information, visit my Finance Information page or Contact Me should you require additional information.

Image courtesy of 401kcalculator.org/Flickr.com