Home Loan Closing Costs Explained

Home Loan Closing Costs Explained

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When purchasing a home there are many fees and costs associated with the transaction. Common costs are title insurance, escrow fees, lender fees, inspections, appraisal, and pre-paid costs such as taxes, insurance, and HOA. Closing costs and fees may be financed into the loan or paid upfront.

Lender and origination fees are a lender’s cost to complete your home loan financing. These fees cover costs associated with processing, underwriting, and funding your new loan. If there is a cost listed for discount points, this is an extra fee being charged for a lower interest rate.

The Escrow Company will charge a fee for their services. In the purchase contract, it will state who the escrow and title company will be and what portion of the fee is to be paid for by the buyer and seller.

Keep in mind that there will be other miscellaneous fees associated with purchasing a home such as home inspection, appraisal, pest inspection, credit report, document recording, and possibly Condo and Homeowner’s Association (HOA) review.

Before getting into the home buying process, it is important to understand what fees you may be faced with and how to pay for them. Open communication with your agent and lender is the first step to ensure you understand the costs of home ownership.

Pre-paid costs are required home ownership costs that are paid upfront instead of in the future. These may be higher or lower depending on whether you will have an impound account or not. Pre-paid costs may include loan interest, homeowner’s insurance, property taxes, and homeowner’s association dues.

To learn more, make sure to watch all of our home buying academy videos. For any questions about home buying or home financing, you may contact us through our website rwmloans.com or call us at 858-794-2155. We have loan officers and real estate agents available to help you start the process.

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