Understanding Your Closing Costs

Buying a home is one of the most exciting times in a person’s life. Putting aside renting and dealing with landlords opens doors for both creativity and privacy. While buying a home is an amazing venture, when it comes to DC mortgages, many people don’t consider all the cost associated with such a transaction. If you are a new or first-time home buyer, you may not figure these additional expenses into your budget, and it can leave you scrambling trying to come up with the cash to cover these expenditures. Many times, a mortgage banker in DC can have the seller cover some of these costs. However, that is not always possible. Here are some common fees associated with the closing costs that you should know about.

Appraisal Fees

Before a lender will release funds for a loan, they want to see an appraisal. What is an appraisal? Well, it shows how much the home is worth. An evaluator walks the home and measures the square feet if there have been any recent remodels, and uses comparable sales in the area to determine a value. The national average for an appraisal fee is $330; however, the prices can vary greatly. If the property is larger, has unique properties, or is in a remote location, then it will cost more to appraise.

Why does the lender require an appraisal? Since the lender is not an expert in the real estate market or your neighborhood, they rely on this third-party information to be confident they can recoup their money, if necessary. They want to make sure the amount of money they are lending is not more than the approximate value of the home. The appraisal fee is paid either before it’s conducted or at closing.

Inspection Fee

Ask any mortgage banker in DC, and they will tell you that the inspection fee is a small price to pay for the wealth of information it provides. An inspector gives both the buyer and the lender valuable data that is needed about the home. In some instances, a sale can fall through because of a bad inspection report. The inspector enters the property and looks for things like roof issues, HVAC problems, sinking foundations, water damage, and evidence of termites.

First Savings Mortgage Corporation and all other lenders will require this inspection. It ensures that the home doesn’t have serious issues that have been hidden. The inspection fees are typically just a few hundred dollars, but it can save you thousands.

Loan Origination Fees

Washington DC mortgage lenders charge a fee to take out a loan or mortgage. The only time this fee would be waved is if you are paying all cash for the home. There is no set price, and the amount will vary based on many factors. The lender must do a great deal of research to put together your loan package, and they charge you for the work. If you have a lower credit score or other problems that had to be sorted out, you can expect your loan origination fees to be higher. Many factors come into play when this fee is determined.

Title Search

Before any DC mortgages can commence, the lender will do a title search. They want to make sure that there are no issues that can prohibit the sale. First, they need to see that the person who is selling the home is the actual owner of the property. Second, they need to make sure there are no liens against the home or property. Many times, if people have fallen on tough times, a judgment can put a lien on the amount of the debt against the home. These liens must be paid off before the funds can be distributed. Though the fee is only around $100 for this search, you must know about any issues that may be against the title before you buy the property.

Title Insurance

Washington DC mortgage lenders require that any home that has a mortgage has title insurance. If any legal issues should arise, both you and the bank have protection. Title insurance is expensive, and it can be up to a few thousand dollars. Keep in mind, it’s a one-time fee, and you will have for this insurance whenever you purchase a home.

Deed Recording Fees

Once you make your purchase, the mortgage company will need to record the deed. The deed transfer puts the home in your name and takes it out of the seller’s name. These fees are nominal at around $100.

Escrow

Any attorneys involved in the process of the sale of the home, as well as the charges paid to the title company, are paid through the escrow fee. You can expect to spend about 1.5 percent of the price of your home to cover this fee.

A Mortgage banker can help you navigate the home buying process. The Busch Team, part of the First Savings Mortgage Corporation, wants to make your dream of owning a home a reality. The process is very detailed, but it’s worth the time and effort to have a place to call your own. Using the mortgage calculator on our website can help you figure the closing costs before you enter into a contract. With more than 20 years of experience, we can help you with your VA or FHA loan, or your adjustable rate mortgage.

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