Depending upon the location and type of property, and extra services you or your lender request, you may also have to pay some of the following at closing:
* An assumption fee is charged when you are taking over or assuming an existing mortgage on the house. The size of the fee will depend on the lender, but it may range from several hundred dollars to 1 percent of the loan amount.
* Home inspection fees for an analysis of the structural condition of the property by an engineer or consultant, and for termite inspections.
* Adjustments for various types of expenses prorated between the seller and the purchaser. Some of the adjustments may involve large amounts. Local property taxes, annual condominium fees and other lump sum service charges, for instance, may be split between you and the seller to cover your respective periods of ownership for the calendar year or tax period.
Settlements are conducted by lending institutions, title insurance companies, escrow companies, real estate brokers, or attorneys. In most cases, whoever conducts the settlement is providing a service to the lender. You may be required to pay for related legal services provided to the lender. You can also retain you own attorney to represent you at all stages of the transaction including settlement.
How Can You Anticipate How Much You Will Have To Pay In Closing Costs?
With such a long list of potential charges at settlement, it is important to know what to expect. To enable you to do that, Congress passed the Real Estate Settlement Procedures Act (RESPA). Your mortgage lender is required to supply you with a Good Faith Estimate of all your closing costs within three business days of your application for a loan, together with a special information booklet called Settlement Costs - A HUD Guide. In addition, a statement of your actual costs should be given to you at or before settlement. Within the same three days, the lender is required, under the Truth in Lending Act, to provide you with a disclosure estimating the costs of the loan you have applied for, including your total finance charge and the Annual Percentage Rate (APR). The APR expresses the cost of your loan as a yearly rate. This rate is likely to be higher than the stated interest rate on your mortgage because it takes into account discount points, mortgage insurance, and certain other fees that add to the cost of your loan.
