REX-Real Estate Exchange Closing Costs

Thursday, August 28, 2008 10:28 PM EDT

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Closing Costs –

A Good Faith Estimate

by Barbara Middleton, Broker-Associate

T he purpose of this guide is to give you an idea of what to expect in costs associated with closing on a residential property.

It is known as a good faith estimate of closing costs and is figured for an average or typical loan.

There are a range of numbers for the loan amount. Choose the number that is nearer to the loan amount you are considering.

Good Faith Estimate for a Loan with "No Points"

Items	Approximate Amount (US$)
Credit Report	$50
Appraisal Fee	$350
Loan Processing fee	$395
Tax Service Fee	$70
Lender's Document Preparation Fee	$500
Owner's policy and Lenders policy for 80% loan to value for a: purchase of $250,000 $1400 purchase of $350,000 $1960 purchase of $450,000 $2520	Varies by loan amount
Escrow Fee purchase of $250,000 $540 purchase of $350,000 $690 purchase of $450,000 $810	Varies by loan amount
Flood Certification	$70
Notary Fees	$30
Recording Fees	$50
Miscellaneous items	$200
Total of above fees:
For a loan of $200,000	$3700 in fees
For a loan of $300.000	$4300 in fees
For a loan of $400,000	$4800 in fees

Summary

1. These are the fees directly related to the loan and are only estimates. Some of them may not apply in your area. In addition to these loan related items, there are transfer taxes and fees.

2. Points were not considered in the above estimate. One point equals 1 percent of the loan amount. On a $200,000 loan, one point would equal $2,000. If you have a loan with "points" that fee will be added to the above and included in your APR (annual percentage rate).

3. There are also prepaid charges to consider. Prepay's are not included in the above estimates. Prepay's are costs that normally would be paid at a later date such as: property taxes,insurance and homeowner's insurance.

4. Another consideration, if you plan to put less than 20 percent as a down payment thereby taking a loan for more than 80 percent of the property value, you will have to pay mortgage insurance. You will have to pay 2-3 months worth of mortgage insurance premiums up front and this will be added to closing costs.

Total closing costs can range anywhere from about 3% to 6% of the loan amount. Remember, these are just approximate figures. The fees vary and closing costs are negotiable. Prior to closing, you will receive a list of all applicable closing costs from your lender. Check it over carefully with your real estate agent to be sure you understand it.

If you have any questions, send me an email with the question and I will be happy to try to answer it.