One or two days before closing, a walk-through of the property is scheduled. The buyers walk through the home with their REALTOR® and make sure the condition of the home is as agreed upon in the contract. Is the home clean? Are all of the included appliances and light fixtures or ceiling fans still in the home? Are there any items that are missing, broken, or left behind by the seller? Were inspection items and repairs addressed by the seller? The walk-through does not take very long and leaves the buyer assured of the home’s condition before closing. If there are any issues that arise out of the scheduled walk-through, your agent will contact the listing agent. The day and time of closing are agreed upon by all parties to the contract and closing normally takes place at a title company. The title company will release closing figures displayed on a HUD-1 Settlement Statement that itemizes closing costs and fees for both the buyer and seller. Common fees that are listed under buyer closing costs are listed below:
ITEMS PAID IN RELATION TO THE LOAN:
Loan Origination Fee: This fee is a charge for originating or creating the loan
Loan Discount: This fee is paid to the lender if you choose to “buy down” the rate. One discount point is equal to one percent of the loan amount.
Appraisal Fee: This is the charge for the appraisal of the home purchased.
Credit Report: This is the fee charged to buyer for obtaining a credit report.
Lender’s Inspection Fee: Fee charged for inspections completed on the request of the lender.
Mortgage Insurance Application Fee: Cost for processing mortgage insurance application.
Flood Certificate: Cost of flood certificate ordered by lender to find out if home is located in a flood area.
Application Fee: Fee for the loan application
Tax Service Fee: One-time payment to lender. When taxes are due annually, a company withdraws from the escrows and pays the taxes. Typically the fee is $70 to $90. This fee cannot be paid by the buyer if it is an FHA loan.
Processing Fee: This is the charge for processing the loan – collecting your application, running credit, collecting pay stubs, bank statements, ordering appraisal, title, etc.
Document Preparation Fee: This is the fee lenders charge for preparing the loan documents.
ITEMS LENDER REQUIRES TO BE PAID IN ADVANCE:
Interest: Interest is prepaid for your mortgage loan at closing and is prorated. It is figured from the day of closing to the first monthly payment; the number of days is multiplied by the amount of interest charged per day. If you close at the end of the month, your prepaid interest will be lower than if you close on the first day of the month.
Mortgage Insurance Premium (MIP): This fee is not common with every loan. If you obtain FHA financing, this item would appear on your closing costs. For FHA loans, the upfront MIP is normally 1.75% of the loan amount and is prepaid to the lender at closing.
VA Funding Fee: This fee is only required to be paid up front with VA loans. The fee with no down payment is 2.15% (fee for initial VA loan) or 3.3% (fee for subsequent VA loan).
Hazard Insurance Premium: Hazard insurance prepaid for the entire year up front at closing. This protects you and the lender from loss due to fire and natural hazards.
Flood Insurance: This is charged only if the lender requires it.
Real Estate Taxes: Lender requires the full year of property taxes paid up front at closing (a portion of this amount is paid by seller).
Hazard Insurance: Lender will usually escrow 2-3 months in reserves for hazard insurance costs.
Taxes: Lender will usually escrow at least 3 months of taxes for reserves for property tax costs.
Settlement or Closing Fee: The title company’s fee for handling the closing and the monies for the lender, agents, buyer, and seller.
Notary Fee: This is the fee of the notary.
Attorney Fees: Charge for legal services
Title Insurance: Insures the title on the property and protects the buyer and lender. This is where the cost of the owner’s policy would be included.
Endorsements: Additional provisions or safeguards to insure and protect lender (Form 100, Form 130, Gap Coverage, Extended Coverage, etc…).
Overnight/Courier Fees: Charge for the overnight of the signed loan or other settlement documents.
Wire Transfer Fees: Charge for wiring monies.
Tax Statement Fee: Charge for researching any unpaid or delinquent taxes on a property.
Loan Closing Fee: Amount charged by the title company for closing the loan documents for the lender.
GOVERNMENT RECORDING AND TRANSFER CHARGES:
Recording Fees: Charge for recording the new information with the El Paso County Clerk and Recorder.
City/County Tax/Stamps: Unavoidable government tax for the transfer
State Tax/Stamps: Unavoidable government tax for the transfer
ADDITIONAL SETTLEMENT CHARGES:
Survey: Charge for survey of property (if Survey was ordered)
Pest Inspection: Charge of pest inspector (if Inspection was ordered)