First-time home buyers in Central Ohio need to be aware of typical buyer closing costs and how to handle them. Understanding closing costs enable you to make wise decisions concerning your mortgage loan and home purchase! Closing costs fall into these main categories:
- Origination fees, and other mortgage loan fees
- Third-party fees
- Pre-paids and line-items, including escrows
For the purpose of illustration, we’re going to focus on lender and transaction fees, taken from our Educated Home Buyer Notebook. Please note that your closing fees will vary, depending on your lender, mortgage type, and the amount of your loan.
Also, please keep in mind that these examples are averages, and show the fees usually paid by the home buyer.
FHA Loans:
- Origination Fee (% of loan amount)
- Discount Points (% of loan amount)
- Appraisal $250 – $375
- Credit Report $30 – $75
- Lender’s Inspection $50 – $100
- Mortgage Insurance Premium (based on loan amount)
- Mortgage Policy $200
- Survey $150 – $225
- Recording Fee $100 – $200
- Home Inspection $250 – $450
Conventional loans have a similar fee structure, with the exception of the Mortgage Insurance Premium. Instead of MIP, Conventional loans have Private Mortgage Insurance, known as PMI. You’ll run into PMI if you have a down payment less than 20% of the home purchase price.
Conventional loans also have more fees than those listed above in our FHA example. These additional fees include:
- Document Preparation Fee $100 – $300
- Underwriting Fee $150 – $400
- Tax Service $75
- Flood Certification Fee $20
- Survey Endorsement $100
- Direct Endorsement (varies)
- Mortgage Assignment Fee (varies)
- Express Mail to Lender $25 – $40
VA loans have the fewest buyer fees, and there is no mortgage insurance requirement:
- Origination Fee (% of loan)
- VA Funding Fee (2% of loan amount)
- Appraisal $250 – $375
- Credit Report $30 – $75
- Mortgage Policy $200
- Survey $150 – $225
- Recording Fee $100 – $200
- Home Inspection $250 – $450
You will also have escrow for your share of prorated property taxes, and other line-item expenses. It isn’t feasible to list every closing cost here, but we will provide you with more detail, as it pertains to your specific situation, when you become our Buyer-Client. We will also give you your own copy of our Educated Home Buyer Notebook, which is not available anywhere else!
If you are thinking ahead to how you’re going to tackle your closing costs, here are your basic options:
- Pay some or all of them at closing.
- Roll them in to your mortgage loan, and finance them.
- Ask the home seller to pay some of your closing costs.
- Combine the strategies above, minimizing what you have to pay out-of-pocket, and minimizing what you would finance into the loan.
If you’re feeling overwhelmed, don’t be alarmed! Your mortgage lender will provide a Good Faith Estimate of your fees and costs, and he or she should explain these items to you. We will refer you to reputable, local lenders who will take the time to explain your options and your costs. We’ll also be happy to take a look at your estimate, and verify if the projected costs are in line.
When you become a Buyer-Client of Buyer’s Resource Realty Services, we can provide financial guidance to you regarding closing costs and typical expenses. We can also negotiate closing costs with the home seller when it’s to your advantage to do so.
As your Exclusive Buyer’s Broker, we serve your best interests at all times! Unlike real estate agents and brokerages who represent sellers, as an Exclusive Buyer’s Broker, we only represent you, the buyer, getting you the best price and terms with no conflict of interest at all times.
Understanding this distinction could literally save you thousands of dollars not only on the purchase price and terms, but also on seller concessions and home inspection issues, whether you are a first-time homebuyer or an experienced homeowner!
Contact us with your home buying questions! Remember, we are with you every step of the way…all the way home!
Andrew Show
Broker, CEBA, CEBA-M, CNE, CSP, ABR-M, e-PRO, GREEN
Buyer’s Resource Realty Services
Serving Metro Columbus, Ohio with Exclusive Buyer’s Agents
7100 North High Street, Suite 204, Worthington, Ohio 43085
614-888-4110 | 888-888-4110 Toll Free | 614-839-4110 Fax
