While some lenders provide for other creative charges at times, this is a list of the most common
closing costs. The list is by no means exhaustive, but it will provide you with an idea of the
traditional costs associated with a mortgage. As you can see, these charges come from the
combination of providers necessary to make your mortgage work.
All About Cash to Close
Cash to close represents the total amount of money that you will need to close on your home.
This is different from your closing costs in that it includes a few more details.
Cash to close includes your total closing costs minus any of those costs which will be financed
or rolled into the overall loan amount. The calculation will include your down payment and
subtracts the earnest money that you submitted with your offer. Any refunds for overpayment,
seller credits, or any other credits will also be listed.
Your cash to close is the sum of your closing costs and down payment, minus any earnest
money, credits, or refunds. The closing costs will represent a significant portion of cash to close,
although there are some additional amounts that go into the calculation of cash to close.
These costs are detailed in your Closing Disclosure under their own respective headings. If you
scan the Closing Disclosure document, you will notice that the closing costs are listed right
above the cash to close amount. While the first is constituted by the various fees associated
specifically with your mortgage, the latter is a more specific formula of closing costs, down
payment, earnest money, and any credits or refunds.
Your REALTEAM Agent can help you understand some of the basics when it
comes to closing costs. While your choice of lender ultimately determines the details, our agents
can help you understand the expected closing costs and answer any other questions you may
have about a home purchase.
When you find that dream home and work with your lender to close the deal, you will be
presented with a document called the Closing Disclosure. Law requires that you are able to
review the document provided by your mortgage lender. The document contains all of the
details on your pending home loan which include: how much you will pay in closing costs, how
much you have paid already (such as earnest money), and how these compare with the original
loan estimate.
Both the Loan Estimate and Closing Disclosure sheets will contain a section labeled “Closing
Costs” and then another labeled “Cash to Close.” While the terms may sound very similar, they
are actually two different items to consider for your mortgage.
The Down-Low on Closing Costs
Referring specifically to fees paid to your mortgage lender to close on your loan, closing costs
will vary depending upon factors like your loan type, location, down payment, and the overall
size of the loan. Some fees are more common than others, and some lenders charge higher
fees than others.
Here is a list of seven of the most common closing cost fees you can expect to pay:
● Application Fee – Lenders charge what is typically a small fee for processing your
mortgage. This covers the administrative side of taking in the mortgage application and
completing the upfront work.
● Appraisal Fee – A mortgage will likely require an appraisal of the home to be purchased
to make sure that the lender is not lending you more money than the home is worth. At
the end of the day, the lender is taking a technical risk in loaning you the money, so they
at least need to know that the house is worth the amount that they’re putting in your
hands in a worst-case scenario.
● Origination Fee – This charge will cover the cost of underwriting the loan.
● Private Mortgage Insurance – If you purchase a home with a loan-to-value(LTV) ratio of
more than 80% for a conventional mortgage, you can expect to pay private mortgage
insurance (PMI). LTV is just a calculation of how much of the value of the house is
represented by the loan. The first month of PMI is paid at closing.
● Recording Fee – A recording fee is the cost of recording the transfer of property in the
local county records. This fee averages around $30.00, but it will vary by location.
● Title Search & Title Insurance – Title insurance is an optional protection against
unexpected claims on your new home’s title. If you opt for the protection, it is typically
paid in full at closing and will be good for the duration that you own the home. A title
search is due diligence conducted by the title search company to verify the status of the
home’s title. It searches for bankruptcies, liens, or other factors that might call into
question your future property.
While some lenders provide for other creative charges at times, this is a list of the most common
closing costs. The list is by no means exhaustive, but it will provide you with an idea of the
traditional costs associated with a mortgage. As you can see, these charges come from the
combination of providers necessary to make your mortgage work.
All About Cash to Close
Cash to close represents the total amount of money that you will need to close on your home.
This is different from your closing costs in that it includes a few more details.
Cash to close includes your total closing costs minus any of those costs which will be financed
or rolled into the overall loan amount. The calculation will include your down payment and
subtracts the earnest money that you submitted with your offer. Any refunds for overpayment,
seller credits, or any other credits will also be listed.
Your cash to close is the sum of your closing costs and down payment, minus any earnest
money, credits, or refunds. The closing costs will represent a significant portion of cash to close,
although there are some additional amounts that go into the calculation of cash to close.
These costs are detailed in your Closing Disclosure under their own respective headings. If you
scan the Closing Disclosure document, you will notice that the closing costs are listed right
above the cash to close amount. While the first is constituted by the various fees associated
specifically with your mortgage, the latter is a more specific formula of closing costs, down
payment, earnest money, and any credits or refunds.
Your REALTEAM Agent can help you understand some of the basics when it
comes to closing costs. While your choice of lender ultimately determines the details, our agents
can help you understand the expected closing costs and answer any other questions you may
have about a home purchase.
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