Question:

What are the closing costs on a mortgage?

Answer:

There are plenty of closing costs when locking on a mortgage and while some might be covered by the seller, typically most will be paid by the buyer. Since some fees can vary widely from state to state and lender to lender, you should collect several Good Faith Estimates from different mortgage lenders. Even then the actual closing costs may vary, so when you get presented with the HUD-1 statement revealing all charges for the borrower to pay, ask your questions, since the total closing costs might be intimidating on your budget.

What You May Expect to Pay

The loan origination fee is a substantial part of the mortgage closing costs. It may vary from 1% to 3% of the loan amount. Discount points are points prepaid by the buyer in exchange for lower interest rate. They are worth paying if you are planning to stay in your home for a longer period of time.

There is also underwriting fee which covers the expenses for processing your application. Do not expect a refund if you pull out.

The appraisal fee is another indispensable fee – the property must be assessed by a professional appraiser so that the bank or mortgage company knows how much money to lend you.

Credit reports, title search and insurance, escrow account, a closing attorney fee will make for some of the remaining mortgage closing costs a buyer is expected to pay.

Hopefully, you will not be asked for more than 6% of the loan to pay at closing. Remember, some fees are negotiable. Also, there are no closing cost mortgages that are worth your consideration if you are short on cash. You may get a slightly higher rate with those but if you are not staying more than several years on the property, this might be the better solution.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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