What Are Closing Costs On Home Purchase Loans?
What Are Closing Costs On Home Purchase Loans Was Updated On May 6, 2017
Closing costs on home purchase loans are the actual expenses that the borrower incurs at closing of a new home mortgage loan.
- Some of the fees and costs are related to borrower’s mortgage loan application.
- Examples of above costs and fees the expense of a credit report on all applicants and rapid rescore fees and costs.
- Other fees and costs are related to the subject property itself, such as the property home appraisal, pest inspection fees, home inspection fees, well inspection, roof inspection, termite inspection fees, and mold inspection fees.
- Closing costs includes any other third party fees and costs such as title charges, attorneys fees, and recording fees.
- Others examples of closing costs are payment to the lender for processing mortgage loan application, credit report fees, loan origination fee, and any other fees and costs associated with the origination, processing, underwriting, and closing the mortgage loan.
How Much Are Closing Costs On Home Purchase Loans
Unless the home seller offers to pay closing costs by giving home buyers a sellers concession towards the home buyers closing costs:
- These expenses are charged to the buyer and often runs between 2 and 3 percent of the amount being borrowed.
- In Illinois, the seller can assist up to 6% in sellers concessions of the loan amount in paying the closing costs for the buyer on a FHA Loan.
- Maximum sellers concession allowed on a owner occupant or second home conventional loan is 3% sellers concession.
- Maximum closing costs allowed on an investment property conventional loan is 2% sellers concession.
- The maximum closing costs allowed on a VA Loan is 4% sellers concessions.
- Closing costs can be paid by the lender for a higher interest rate too through a lenders credit towards closing costs.
- Because different states have different fees and taxes that are a part of these costs, it’s impossible to generalize nationwide.
Examples Of Closing Costs On Home Purchase Loans
Common closing costs can include the following:
- Processing and underwriting fee
- Mortgage insurance premium
- Home appraisal fee
- Credit report fees
- Tax service fee and application fee for third party vendors
- Recording fees for the county
- Transfer stamps
- Title charges
- Wire transfer fee, etc.
- Escrow accounts are often required for many loans for homeowners insurance, real estate taxes, and homeowners associations and require cash deposits at closing and is part of closing costs on home purchase loans.
Once a mortgage loan applicant applies for a mortgage with a loan officer. the loan officer will send out the Loan Estimate, which replaced the old Good Faith Estimate, and on the LE, it will have all estimated closing costs. Most closing costs disclosed on the Loan Estimate is over disclosed.
Lender Credit For Closing Costs On Home Purchase Loans
The Gustan Cho Team can help borrowers who are short on closing costs on home purchase loans by covering the shortage of the costs with a lender credit so borrowers do not have to come with any money out of pocket. Most of our borrowers who refinance with us, there is no closing costs on refinances because we cover the closing costs. For more information about this topic or any other mortgage and/or real estate related topic, please contact Gustan Cho at 800-900-8569 or text Gustan on his cell at 262-716-8151 or email us at email@example.com.