Last Updated on May 3, 2019 by Luke Feldbrugge
The costs to purchase a home can add up quickly. It is good to know what home closing costs you may need to pay, as you prepare for your home purchase and the closing process, so we assembled this list of potential home closing costs. It’s not likely your loan will include all of these costs and some may not apply to your particular circumstance due to your location, your service providers, and the type of loan you choose.
If you are not currently working with a mortgage lender, and would like cost estimates for your situation, we recommend you speak with a mortgage professional. Sign up with Homes for Heroes and we will connect you with our local specialists who can provide you with more accurate information because they serve within your community, and they will save you money.
If you’re not ready to speak with someone, we get it. Here’s the list of potential home closing costs to reference:
Application Fee: Covers the cost for your lender to process your loan application.
Attorney Fee: Cost of an attorney to review the closing documents (not required in all states).
Closing or Escrow Fee: Paid to the title company, escrow company or attorney for conducting the closing.
Courier Fee: Cost of transporting documents to complete the loan transaction.
Credit Report Fee: Cost to pull a credit report to retrieve your credit history and score.
Life of Loan FEMA Flood Determination Fee: Cost to determine if the property is located in a flood zone.
Loan Discount Points: Fee paid to lender at closing for a reduced interest rate, also know as “buying down the rate.”
Origination Fee: Covers the lender’s administrative costs.
Recording Fee: Cost paid to local recording office for the recording of public land records.
Survey Fee: Cost for a survey company to verify all property lines (not required in all states).
Title Search Fee: Paid to title company for doing a search of the property’s records, and ensuring no one else has a claim to the property.
Underwriting Fee: Paid to lender for researching whether or not to approve you for the loan.
VA Funding Fee: If you choose a VA loan, you may need to pay a VA funding fee at closing (or roll it into your loan). The percentage depends on your type of service and the amount of your down payment.
Homeowners’ Insurance Policy: Covers damages to your home and typically you will pay the first year’s coverage at closing.
Lender Title Insurance (Loan Policy): Confirms you own the home and protects the lender if there is a problem with the title.
Owner’s Title Insurance: Protects you if someone challenges your ownership of the home. This is optional.
Private Mortgage Insurance (PMI): If your down payment is less than 20% of the home’s purchase price, you may need to pay the first month’s PMI payment.
FHA Up-Front MIP: If you choose an FHA loan, you will need to pay the UPMIP fee of 1.75% of the base loan amount. You may prefer to add it to the cost of your loan.
Appraisal and Inspection Costs
Home Appraisal: Cost for an appraisal company to confirm the fair market value of the home you want to purchase.
Home Inspection: Cost of home inspection to verify condition of a property and check for home repairs to complete before closing.
Lead-Based Paint Inspection: Cost to determine lead-based paint risk.
Pest Inspection: Cost to inspect for termites or dry rot. This is required in some states and for government loans. Hiring companies like terminix in ohio, and other states should help to minimalize costs of this inspection and possible extermination.
Interest, Taxes and Other Costs
Escrow Deposit: You may be asked to put down two months of property tax and mortgage insurance payments at closing.
Prepaid Interest: This is interest that accrues between closing and the date of your first mortgage payment.
Property Tax: Lenders typically want any taxes due within 60 days of your home purchase to be paid at closing.
Transfer Tax: Tax paid when the title passes from seller to buyer.
One thing to note: There is always a chance the seller will pay your closing costs. Be sure to ask if that can happen.
Good News: Save on Closing Fees with Homes for Heroes
By working with Homes for Heroes mortgage, title and home inspector specialists you can save on some of these costs. You qualify for the savings offered by Homes for Heroes if you’ve served at any point in your lifetime as a firefighter, EMS, law enforcement, military (active, reserve or veteran), healthcare professional or teacher. Simply sign up to speak with our local specialist(s). There is no obligation, and they will work with you to get you the best mortgage and the home you want.
Thank you for your service.