CITIES SERVED:

Camp Pendleton South - 92058

Absolutely, Positively, Caring Attitude, Quality Service, Guaranteed!

Real Estate Agent

Alicia R. Chase

(619)727-1244
Ca DRE License #00758097
alicia@teamchase.com

Closing Costs

Saving on Buyer Closing Costs

When it comes to buying a home, things can get expensive, and buyer closing costs are no exception. We take a look at the best ways to lower closing costs and whether no closing cost mortgage loans are worthwhile.

Your biggest hurdle may be your down payment when purchasing a home, but it's important to remember the closing costs. Often disregarded, closing costs can be an unwelcome surprise when finalizing your home purchase—and more than likely they won't come cheap.

When buying a new home or refinancing your current home, it is critically important that you're aware of all the costs involved in your home loan, or it's going to cost you. Closing costs are the miscellaneous fees charged by those involved with a home sale. You can expect to pay anywhere from 2 to 4 percent of the total sale price in closing costs, depending on your unique situation. Mortgage loan closing costs can be excessive, but if you're prudent, you can save thousands when it comes to finalizing your loan.

Unfortunately, many new homebuyers just accept the exorbitant list of closing costs fees as an inevitability of the process. The experience can be a bewildering one for these individuals. They don't want to risk their American dream on a few unsubstantiated costs. But, it doesn't have to be this way; understanding the process can help you save on Buyer's Closing Costs. When it comes to buying a home, things can get expensive, and buyer closing costs are no exception. We take a look at the best ways to lower closing costs and whether no closing cost mortgage loans are worthwhile.

Closing costs are separated into two categories: non-recurring closing costs and recurring costs. Below is an assortment of both the non-recurring and the recurring closing costs you may be expected to pay.

Non-Recurring Closing Costs

Title Insurance
Title Search
Attorney fees
Escrow fees
Notary fees
Wire fees
Courier fees
Home Inspection
Recording Fees (local fees)
Credit Check
Document Preparation
Appraisal Fees
Endorsements
Transfer Fees (county/city)

Recurring Closing Costs

Property Tax
Private Mortgage Insurance
Flood Insurance
Fire Insurance

The non-recurring closing costs (junk fees) stated above can be negotiated down or eliminated entirely. With a little bit of discernment you can come to the bargaining table prepared. Some of the recurring closing costs mentioned would be dependent on your individual situation. You may live in an area where flood insurance is not required. Or your circumstances may not warrant private mortgage insurance.

When you begin the loan process, it will go something like this. Along with your loan rate and information, your lender gives you a list of expected fees, called a good faith estimate (GFE). Required by the Real Estate Settlement Procedures Act (RESPA), the good faith estimate must be provided to you, the borrower, within three days of taking your loan application. The intent of the good faith estimate is to give you a closing cost estimate. The problem with any GFE is that the lender isn't required by law to stick by the fees stated within the GFE. This allows some of the more unscrupulous lenders to add new fees before closing. Make sure that any fee changes or unexpected surprises are explained and justified by your lender.

When reviewing the GFE, you can find the fees structured in the following range of numbers: 800’s, 900’s, 1000’s, 1100’s, 1200’s and 1300’s. A good tip is to take a look at the 800 section. This is where most of the negotiable fees are located. These include (but aren't limited to) application fee, commitment fee, document preparation, underwriting, and processing. This is where you should focus your negotiation efforts. Some of the items in the 800 section are third party fees, and though they may not be negotiable, they should be passed on to the borrower without markup.

It also pays to proceed with caution when it comes to brokers touting no closing cost loans. Theoretically, there is no such thing as a no closing cost mortgage. As altruistic as many lenders may be, they still need to make a profit. So, make no mistake, the borrower foots the bill, one way or another, by either paying now or in the future, through higher rates.

A no closing cost loan may help you avoid the non-recurring closing costs, but they'll do so at a cost, the cost being a higher interest rate. And while there may not be any lender fees, you'll still have to pay for the title search, title insurance, home appraisal, credit check and other possible charges.

Closing Costs (U.S. Average)

Origination Fees

Closing Costs

Average Charges
Description

Points ($)

$1,043
Fees lender's charge upfront in exchange for a lower interest rate, with each point equaling 1% of the amount of the loan. Typically, the more points paid up front, the lower the interest rate on the loan.

Application fee

$250
It is not at all uncommon for lenders to charge an application fee.
Negotiable.

Commitment fee

$371
Banks term for underwriting fee. Fee charged to have your loan reviewed by an underwriter. Also known as a "junk" fee.
Negotiable.

Document preparation

$291
Covers the preparation of final legal documents, essentially a way to extract more money from the borrower and put a label on it.
Negotiable.

Mortgage broker, origination or lender fees

$779
Fees charged by brokers to arrange the financing of your mortgage. This is justified by representing you and finding you a competitive rate.
Negotiable.

Processing

$386
Much like the underwriting fee, this cost is associated with processing your loan.
Negotiable.

Tax service

$67
Issue tax certificates showing current years taxes, when they were paid last, and any delinquencies.
Negotiable.

Underwriting

$201
Fee charged to have your loan reviewed by an underwriter. Also known as a "junk" fee.
Negotiable.

Wire transfer

$16
Fee to get money from the lender to the borrower.
Negotiable.

Title and Closing Fees

Closing Costs

Average Charge
Description

Appraisal

$343
The lender will require an appraisal from an independent appraiser.

Attorney, closing or settlement fee

$362
Fees paid to an independent attorney for reviewing the closing papers.

Credit report

$22
Just about all lenders make this fee a mandatory one.

Flood certification

$14
Service that tells the lender whether the property is in a flood area or not. This could trigger the need for flood insurance.

Pest and other inspection

$60
An examination of property for things like, termite inspection, and whether required changes were made prior to funds being disbursed.

Postage / courier

$35
Fees associated with the delivery of documents.

Survey

$144
Not all lenders require a survey.

Title insurance

$663
The lender will most certainly require title insurance to guarantee the title, regardless of what the title work turns up.

Title work: Title search, plat drawing, name search, endorsements $196
Title work is conducted to make sure there are no unpaid mortgages, defective title or tax liens.

Total average fees

$3,024
Based on a $200,000 loan amount. U.S. average total closing costs. Some fees are omitted from the total, as not all lenders charge for each and every item.

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