Ryan’s Mortgage Blog:
As promised, below is a list of ESTIMATED COMMON CLOSING COSTS (not what my company or I charge) associated with a mortgage (all of which may not apply to your loan). These are based on a typical single family residence in California and are numbers I compiled after viewing clients transactions with various companies.
– Appraisal $250 – $550
– Credit Report $0 – $20
– Processing Fee $300 – $700 (Paid to Broker’s processors)
– Underwriting $400 – $800 (Paid to Lender)
– Closing/Escrow $400-$600 (Paid to Escrow Company/Based on Value of Home)
– Doc. Prep Fee $100 (Paid to Escrow)
– Title $400-$1500 (Paid to Title/Based on Value)
– Notary $50-$150
– Recording $100 (Paid to city/government)
– Tax related service fee $50-$100
– Wire Transfer Fee $25-$100
Average Total: $2,920 – Not including Origination/Broker Fee – I did it like this so you can see what the minimum usually is WITHOUT the broker fee. So this is before the company makes any money, granted they didn’t hide any fees in other areas (shady stuff that can happen).
Loan Origination or Broker Fee 0.5% – 1% (Paid to Broker) This could be broken up into two different fees depending on the situation but still should total around this amount. This is the fee you really need to be careful of, it is what lenders and brokers charge for their services. Every company has their own ways of calculating this and what variables are included (building expenses, advertising, sales commissions, staffing, equipment, etc…). Anything above 1% should throw up a red flag, and depending on the loan amount, even 1% can be very high.
Average Total with Broker Fee: $5,500
Optional: Discount Points .5%-2% (form of prepaid interest paid to the lender in turn for a reduced interest rate. These fees are usually tax deductible.)
– Hazard Insurance (required)
– Mortgage Insurance (not always required)
– Pre-paid tax (how much is optional sometimes)
– 30 days interest paid upfront (varies depending on what time of the month you close and lenders requirements)
All four of these “not included” fees could cost upwards of $2,000 – $4000 but are not usually included when talking about the “closing costs” of the loan, because they aren’t necessarily costs of doing the loan, and can vary depending on the borrowers options. BUT they are paid at closing so be aware of them. They should be included in the GFE though, in a separate section near the bottom.
Finally, be aware when purchasing a home that the seller can pay some or all closing costs for you. This can be a good thing to negotiate in today’s market!
If you have any questions or comments, you can reach me at 805-540-0866 or RBaker@PeregrineLending.com.