Mortgage Closing Costs and Closing Your Home Loan

When you purchase a home, you may be wondering about closing costs. What are the home closing costs? Who is charging these fees? When will I find out how much they are? How do I find a closing attorney?

When you close with us, we are here for you every step of the way, and all of this information will be clearly outlined in your Closing Disclosure and provided to you well in advance of your scheduled closing. There are several different fees and charges that go into the process of buying or selling a house or land.  This post will briefly outline for you the typical closing costs so you can be better informed and educated about the process.

Real Estate Agent or Realtor Commissions:
Both the realtor who listed the property for sale, and the realtor who found the property for the buyer, will want to be compensated for their work. In addition to that, the loan officer who hopefully helped you along the way to get financing for little or no money down, and at the best interest rate, also must be paid for their efforts. Loan fees will be listed in the Loan Costs section.  Realtor Commissions are listed elsewhere (in “Other” under “Other Costs”).

State and Local Taxes:
Don’t forget, your State and local taxing authority also want a piece of the pie. There will be fees listed on your Closing Disclosure for Deed filing, pro-rations for local property tax, as well as fees for the State transfer tax, also known as deed stamps, tax stamps, transfer tax, or excise tax.

Attorney’s Fees:
Another important player in this mix is the closing attorney. Your friendly neighborhood lawyer, like me, is there to make sure that all the money changing hands gets to the right place, at the right time, and ensures that when you walk away from the closing table with the keys to your new home, you have (or you will get after it’s filed in the County Registry of Deeds) a piece of paper granting you the legal right to occupy the land and home to exclusion of all others- a Deed. Often these fees are listed under Loan Costs for Settlement Agent and Title Search.

Title Insurance:
Another typical closing cost is Title Insurance, both for you as the home owner and for the lender. The Title Company, or the Title Insurance company, issues a policy at closing for a one time premium that protects the Bank for as long as their is a mortgage, and protects you, the homeowner, for as long as you or your heirs hold a legal interest in the property, and, even longer than that if you sell, and there is defect in the chain of title later discovered that would bring your Warranty Deed into litigation…but that is another matter for another Blog post.  Sufficed to say, the Title Insurance premium paid at closing is a small investment to protect a very large investment.

Other Costs, Fees, Prepaids:
Other typical closing costs associated with closing include the following, some of which are known as “prepaids” because they may have been paid in advance and then accounted for at the closing. There could be a charge to obtain your credit report, a flood certification, potentially a survey, document and Deed preparation fees, home inspection fees, your homeowners insurance, and an appraisal for the property to determine it’s value.  Of course, every case is different and this is by no means an exhaustive lists, so be sure to check your Closing Disclosure carefully.

Avoiding Closing Costs:
If you are bargaining to have the seller pay your closing costs, be sure to work closely with your Realtor and Loan Officer. These rules vary widely but for a standard FHA loan, it is usually limited to 6% of loan.  Thus, if your loan is $200,000, up to $12,000 in actual closing costs may be covered by the seller in the transaction.

CLOSING YOUR HOME LOAN:
Now that we’ve examined what the closing costs are, let me turn briefly to address the actual “closing.” Under new rules put into place recently by the Consumer Financial Protection Bureau, you are entitled to receive both a “Loan Estimate” and a “Closing Disclosure.”  These new rules are often referred to in the industry as TRID, which is short for TILA, RESPA, Integrated Disclosures…but again that might be a topic for a separate Blog post! A very helpful FAQ was created by an industry leader on the topic if you’re interested in further reading.

Closing Disclosure Replaces HUD-1:
No less than three days before the closing, you will receive the Closing Disclosure which will detail all of the closing costs. A similar document was used in the past known as the HUD-1.  You should be in contact with the closing attorney/title company (hopefully us here at Associated) well in advance of closing so you can receive this information, review it, and request any needed changes. Here, you can log-in to your account to send a secure message, or call, fax, or email us any requested changes.

Know Before You Owe:
At Associated, our closing attorneys want you to “know before you owe” as the CFPB has dubbed it. Just as this Blog post is intended to educate you about the potential costs and fees, we never want to surprise you with mysterious fees. Each charge associated with closing your home loan will be outlined clearly for your advance review so that they may be adjusted if necessary well before closing.

Associated Attorneys Will Close Your Loan:
Anyone who closes with us can choose to have 24/7 secure electronic access to their information throughout the process for no additional charge. You’ll note that our website has a portal through which you can securely log in to view important documents and dates as well as communicate with the closing team.  A separate log-in, linked specifically to your closing, can be made available to your Real Estate Agent and Mortgage Loan Officer as well.

With all of your information well in hand regarding the closing costs, the documents involved, and the time and place of your closing, you can show up, sign the paper work, receive your check or the keys to your new home, and be on your way in no time. Congratulations!  You did it, and we hopefully made the process clear and easy for you.

Special Offer:
If you are currently shopping for a new home and would like to close your loan with us. Please feel free to email me directly anytime at: Jake@AAONE.LAW. We would be pleased to handle your transaction. Mention this Blog post, and receive 10% off the settlement fee.

Sincerely,

Atty. John F. Skinner, III