Closing on your new home is an exciting time. You have just received word from your Realtor that your offer has been accepted, the closing date is set and you are pulling together all the final details. The final step is the settlement or closing.
If not prepared, the settlement statement (ie: good faith estimate), breakdown of the loan cost from the lender can be a real eye opener. You ask yourself, where on earth did all these closing costs come from; and do you really have to pay all these fees?
Regardless of how you negotiated your purchase contract and the structure of your loan with your mortgage professional, it is important to understand the fees associated with your new loan. Some fees represent actual costs to the lender imposed on them by third parties, and are NOT negotiable. As with anything in the home buying process, ask about any fee whose purpose you don't understand. Here are some examples of common non-negotiable fees:
- Credit check fee. The lender has to pay this to verify your credit history.
- Appraisal fee. A lender must make sure your house is worth the price you're paying.
- Underwriting and Processing: These are fees charged to the borrower to underwrite t
he loan and process and prepare the loan for closing. - Title insurance fee. Title Insurance is required on all mortgage loans and is a requirement by the lender. This fee purchases an insurance policy protecting the lender in case legal problems crop up with the title to your new home. The insurance doesn't protect you, the buyer, in anyway if you want such an insurance policy, you have to purchase it yourself at or within a stipulated time period of closing. Most title insurance companies recommend you do this. Problems with title are very uncommon, Keep in mind that legal fees can be costly, so make some inquiries and decide whether or not you want to assume the risk.
- Courier fees and document preparation fees for the title insurance company.
- Fees for determining whether you live in a flood-prone area.
- Government fees for tax stamps affixed to the deed and for recording the transfer of the deed.
Finally, expect your closing costs to include what is referred to as "pre-paid items". Pre-paid items would include portions of your homeowners insurance and property taxes to put into your escrow account, in addition to pre-paid interest on the new loan. Mortgage interest is always paid in arrears or backwards. In simple terms, your mortgage interest is paid after it is earned. Example: Payment due on March 1st is paying for the interest earned on the loan for the previous month, in this example, February. So if you close your loan on the 15th of the month, you can expect to see 15 days of interest as a pre-paid item on your settlement statement.
If you are interested in more information or would like a personal "No Obligation" consultation, please feel free to contact my office at 920-560-5606 x 103 and ask for Gwenn Tanvas. We are here to help you through the mortgage planning process and assure that you have all the facts into front of you to make an informed decision.
Gwenn Tanvas is a Certified Mortgage Planning Specialists who specializes in Government Programs such as FHA, State and Federal VA and USDA Rural Housing Loans. Visit her website for more information, on-line calculators and a secure on-line application. She is able to assist with transaction throughout the state of Wisconsin. Her offices are located in Appleton, Oshkosh and Green Bay and offers the convenience of one-stop shopping. http://www.WisconsinLoanTips.com or http://www.MortgageProsOfWisconsin.com she can also be reached for comment or to answer questions via email at gwennt@centurytel.net
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