Closing Costs Are How Much

Dated: 10/24/2017

Views: 185

Image titleYou can call me at 701.306.1631 or email SellingFargo@Gmail.com for questions and consultation. There is no charge to speak to a Realtor.

Generally speaking, the closing costs of a Fargo home or a condo can be calculated before you place your home for sale. In fact, you should calculate your closing costs ahead of selling your home so you can know your absolute minimum selling price. 

Closing Costs

Closing costs are fees paid to the third parties that help process the transaction of a home, and they vary considerably by location. Generally, they typically average in total 2% to 7% of the home's purchase price.

Both buyers and sellers generally pay the closing costs, but with buyers paying the larger portion of about (3% to 4% of the home's price) while the sellers pay about (1% to 3%). And although some closing costs have to be paid before the house is officially sold (such as the home inspection fee upon performance), most of the closing fees are paid at the end when you close on the house and shake hands.

The listing agent you select should be able to present to you a “seller’s estimated net proceeds” form or a base calculation.  It’s pretty easy for a real estate agent with experience and a tool that is common to listing agents.

The seller’s estimation tools can give an approximate figure of the list price of the home for sale, and take into consideration fees like property taxes, homeowners association fees, documentary tax deed, title fees, real estate marketing fee commissions and additional recording fees.  The home seller should know their net closing. 

There are a few customary fees that can have slight variations in different counties in North Dakota/ Minnesota so it will be a good idea to know in advance, which party will be paying for items such as title insurance.  At the closing table, costs and expenses should be sorted out in advance.

Non-Recurring Closing Costs Associated with the Lender

Appraisal fee: cost varies. The property being appraised is collateral for your mortgage so the lender will want to verify that the property’s value is comparable to similar property based on recent sales in your area.

Credit Report: $7-$60. The lender naturally wants to verify your good (or acceptable) credit rating.

Flood certification fee: cost varies. The certification verifies whether your property is in a federally designated flood zone.

Flood monitoring: cost varies. This service monitors your property if and when flood zones are remapped.

Loan discount: cost varies. These are discount points, each equal to 1 percent of the loan amount, in addition to the loan origination fee.

Loan Origination Fee: cost varies. This is also called "points." Typically, the more you pay in points, the lower the interest rate.

Mortgage broker fee: They may also add in any broker processing fees in this area.

Tax service fee: $70-$80. This fee goes to an independent service that monitors your payment of property tax for the lender.

Other Lender Fees

Administration fee: cost varies. Either this or an underwriting fee will typically be charged.

Appraisal review fee: $75-$150. An appraisal review is usually done on higher-valued properties.

Document Preparation: around $200. Even though lenders now can draw up their own documents without paying document preparation firms, you’ll still pay this.

Underwriting fee: $300-$350. This is the cost of putting the loan together.

Wire transfer fee: cost varies. This is the cost to transfer funds from one account to another.

Items required to be paid in advance

Homeowner’s insurance: cost varies. You are usually required to pay the entire first year’s insurance premiums at closing.

Mortgage insurance: cost varies. Some first-time homebuyer programs still require the first year mortgage insurance premium to be paid in advance.

Pre-paid interest: cost varies. This is the interest that will accumulate between the day of closing and the day the first payment is due, usually the first of the following month.

Upfront mortgage insurance premium: cost varies. This is 2.25 percent of the loan balance, normally added to the balance of the loan. It is charged on FHA purchases of single family homes or planned unit developments.

VA funding fee: cost varies. This is paid to the Veterans Administration for guaranteeing your loan.

Reserves Deposited with Lender

Homeowners insurance impounds: cost varies. Lenders are allowed to keep two months’ worth of reserves in your impound account, so you will need to deposit two months’ worth of premiums to start it up.

Mortgage insurance impounds: cost varies. As noted above, most lenders allow mortgage insurance monthly, but you might have to put two months’ worth of premiums into an impound account for a reserve.

Property tax impounds: cost varies. Depending upon when taxes are due determines how much you will have to deposit towards taxes to start up your impound account.

Non-recurring closing costs

Closing/escrow/settlement fee: cost varies.

Courier fee: cost varies. This is the charge for sending documents back and forth between lender and borrower.

Home inspection: cost varies. This is optional, but recommended, cost.

Home warranty: cost varies. Also optional, a home warranty usually covers such items as the major appliances, should they break down within a specific time. Often this is paid by the seller.

Homeowner’s association transfer fee: cost varies. This is the cost to transfer the membership from the seller to the buyer.

Loan tie-in fee: cost varies. Usually charged by the closing agent, this is for services they provide in dealing with the lender.

Notary fees: around $40. This is to make the document signatures legal.

Pest inspection: around $75. This inspection tests for pests and problems such as wood rot and water damage.

Recording fees: $40-$75. Charged to record documents with county government recorder.

Sub-escrow fee: cost varies. The title insurance company usually charges this for dealing with the closing agent.

Title insurance: cost varies. You pay this to make sure you have clear title to the property.

 

A well-experienced listing agent will be able to come up with a relatively accurate net sheet in a few moments within a couple hundred dollars of your net proceeds figure. If you’re looking for more assured accuracy, a title company will be able to prepare a draft settlement sheet of the net selling as well.

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