Articles

Closing Costs Demystified

Be sure to budget for these expenses

You're ready to buy a house. You're going to get a pre-approval from your loan originator so you know how much you can afford. You've looked at homes online. You're talking to real estate agents who know the neighborhoods you like. You know you'll need to pay property taxes and homeowners insurance as part of your monthly mortgage payment. And then you hear about closing costs. What? More money? Don't panic. Let's look at those costs and see what they cover and how they affect you.

What are closing costs?

As the name suggests, these are fees paid at the time of closing - when you sign your documents, take ownership, and get your keys. Some are paid by the seller, but most are paid by the buyer. They generally range from 2%-5% of the purchase price of your home. It's important to note that fees vary by loan program, lender, and your location. In some areas the seller pays for the appraisal. Some states require you to use an attorney. Some places have transfer taxes, others do not.

Possible closing costs

Remember - not all of these will apply to your transaction

Title search - makes sure the seller has clear title (ownership) and can sell the property to you
Title insurance (homeowners and lender's) - coverage for title issues that arise after the sale
Appraisal - ensures the property is worth what you're paying for it
Inspection - identifies any problems with the home (leaky roof, bad foundation, broken windows)
Application and assumption fees - the cost of applying for a loan or assuming an existing loan
Attorney costs - if you need an attorney as part of your transaction
Origination fees - the cost of processing the loan
Mortgage insurance application fees - usually required when your down payment is less than 20%
Property taxes - your pro-rated share of the taxes
Mortgage broker fees - commission charged by a broker
Homeowners insurance - coverage from the time you close until you make your first mortgage payment
Prepaid interest - interest due from the time you close your loan until you make your first payment
Transfer tax - a local government charge to transfer your home's title (ownership)
HOA fees - for property with a homeowners association
FHA/VA/USDA fees - loan-specific fees associated with each program
Survey - verifies the property lines are correct

How will I know what fees apply to my closing?

Good news: you don't have to figure this out by yourself. Your CCM loan officer will know exactly what fees will be required for the type of loan you choose, and how much they will cost.

Can I get help paying these costs?

Funny you should ask. Your Preferred Mortgage Savings Plan from CrossCountry Mortgage will pay a share of your closing costs! Nice deal, right? In addition, you may be able to negotiate some seller concessions, but there are limits on how much a seller can contribute to your closing costs. And if you qualify, there are down payment and closing cost assistance programs in many states, cities, and counties. Explore these options with your CCM loan officer.