That’s a rather broad question, and one for which there is no simple answer. But there are certain costs associated with buying that can be pinned down a bit.*  [A good lender will provide you with a "Good Faith Estimate" for you to let you know, line by line, what your costs will be. If you don't receive one of these, change lenders.]

In the Greensboro area some costs you can expect to pay, as a buyer are:

• Credit Report Fee -$50 (usually paid at the time of loan application)
• Appraisal Fee -$350 (usually paid at loan application)
• Home Inspection -$325 (not required, but always recommended, usually paid at the time of the inspection)
• Pest Inspection – $60
• Attorney’s fee – $450
• Loan Origination Fee - 1% of mortgage amount (usually)
• Flood Certification Fee – $20
• Home Owner’s Insurance – $500 (paid 1-year in advance, at closing)
• Commitment Fee – $400
• Tax Service Fee – $70
  

These costs are in addition to your down payment and any prepaid property taxes you will be charged. And these are just estimates for what is customary in our market.

What is NOT customary is something I heard earlier today where a buyer (not represented by anyone in our company) paid $1000 for an attorney fee and $1500 in commitment fee. Outrageous. The lender told the buyer he had to use this particular attorney (“He does all our closings”).

Clearly, the lender and the attorney have a real back-scratching relationship going on. It makes me mad just thinking about it.

$1000 for an attorney?? In this area? $1500 commitment fee??!!!!

Please, please, please ask questions. And you are not obligated to use any attorney you don’t want to if you are the one paying the fee. If a lender can’t manage to get a loan closed unless “Dewey Cheatum & Howe” handles things, then move on down the road. There are too many excellent lenders out there who are anxious for your business to waste your time and money on one who thinks they’re in the driver’s seat in the transaction.

Grrr.. I’m angry on behalf of that buyer, whoever he is.

Tags: attorney fee, closing costs, inspection cost, loan origination fee

So you’re doing the right thing, getting your financing in order so that you can take advantage of this historical buyer’s market, and your lender has told you how much of a loan you can afford, what your monthly payments will be and what your costs on the day of closing will be. Good for you.

What, though, are all these line items on the “Good Faith Estimate”. Of course, your lender will be able to explain all of them. But perhaps you want to verify wheat you’ve been told. Or you just need a bit more explanation. Maybe you’re just shy about asking. (So many of us feel we should be knowledgeable about everything and it’s just not possible. NEVER refrain from asking questions. A professional, conscientious lender, agent, attorney, inspector will welcome being able to answer you.)

All that having been said, what are those danged charges? Follows is a partial list of some of the charges you may find when you buy a house. These are the costs that are generally considered charged to arrange the loan itself. There are other costs regarding taxes, insurance, revenue stamps and attorney fees that will be addressed in subsequent posts.

[NOTE: Legitimate charges can vary by region, the type of loan and the lender. When in doubt the reason for a cost, ask]

Origination Fee: The lender charges this to cover the cost associated with setting up the mortgage. Often it will be expressed as “1 point, ½ point, 1.5 point, etc.,”. A point equals 1% of the amount financed.

Loan Discount Fee: This is a charge paid if you decide to may extra for a reduced interest rate. Doing so is not always a good idea as you need to weigh whether the cost of the discount fee (again, usually expressed in terms of ‘points’) is made up by the reduction in monthly payments. Ask your lender to calculate the savings and how long you’d need to stay in the house for the discount fee is ‘paid for’.)

Appraisal Fee: The appraisal is required by the lender to ensure the property is worth what is being loaned. This is one fee the lender will generally require in advance.

Credit Report: The lender requires this in order to make sure YOU are worth what they’re lending. It will show your payment history, total outstanding loans, open lines of credit, etc., this lender will also probably require this up front at the start of the application process.

Application Fee: Strictly a fee charged by a lender and will vary widely depending on the lender. Some lenders don’t charge on at all.

Commitment Fee: Another lender fee. Varies greatly lender to lender.

Document Fee: See previous two items.

Flood Certification Fee:  Covers cost to evaluate whether property is in a flood plain and whether flood insurance will be required.

Tags: Greensboro real estate, loan discount point, loan origination fee, mortgage terms, real estate terms