In some parts of the country, the transfer, recordation, and property taxes collected by local and state governments may be among the heftiest charges paid at settlement.
While there is no way to avoid paying these taxes, you may be able to lessen your share of the bill. Try shifting some or all of the cost to the house. But remember, you must do this when you make your offer to purchase the property.
Mortgage-Related Closing Costs
The costs of getting a mortgage may be imposed by your lender as early as when you apply for your loan. Mortgage-related closing costs include:
* Application Fee. Imposed by your lender, this charge covers the initial costs of processing your loan request and checking your credit report.
* Appraisal Fee. This fee pays for an independent appraisal of the home you want to purchase. The lender requires this opinion or estimate of the market value of the house for the loan.
* Survey. At a minimum, the lender will require an independent verification from a surveying firm that your lot has not been encroached upon by any structures since the last survey conducted on the property. Alternatively, the lender may insist upon a complete (and more costly) survey to ensure that the house and other structures legally are where you and the seller say they are.
* Loan Origination Fees and Discount Points. The origination fee is charged for the lender's work in evaluating and preparing your mortgage loan. Discount points are prepaid finance charges imposed by the lender at closing to increase the yield to the lender beyond the stated interest rate on the mortgage note. One point equals one percent of the loan amount. For example, one point on a $75,000 loan would be $750. In some cases - especially with refinances - the points can be financed by adding them to the loan amount.
* Mortgage Insurance. Buyers who make down payments less than 20 percent (and in some cases 30 percent) of the value of the house may be required by lenders, and by law in some states, to take out mortgage insurance. The policy covers the lender's risk in the event the buyer fails to make the loan payments. Premiums are typically paid annually from an escrow or reserve account, or in a lump sum at closing. A buyer, whose mortgage is insured by FHA or guaranteed by VA, will have to pay FHA mortgage insurance premiums or VA guarantee fees.
* Homeowner's & Hazard Insurance. A form or protection against physical damage to the house by fire, wind, vandalism, and other causes. Your lender will expect you to have a policy in effect at closing.
