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Fee Fie Fools!

Many a new poster has requested a breakdown of expectable finance closing costs. Here they be;

"Typical" closing costs, when figured as regular cash (not tucked in or hidden anywhere in the loan or interest rates...) would be;

Origination = approx. 1%
(aka lender's fees, application fees, commitment fees, discount fees (sometimes), lock fees, admin fees (sometimes), processing fees (sometimes), et. al.)
Appraisal = $250 - $800
Title Work = $350 - $600 (or a lot more in NY/NJ)
Escrow/Closing = $350 - $600
Processing = $250 - $600
Underwriting = $0 - $495
Credit review = $0 - $60
Tax servicing = $40 - $150
Flood cert. = $10 - $35
Recording = $25 - $75 (or ?)
Reconveyance = $50 - $250
Survey = varies widely
Doc Prep = $0 - $250
Wire trfr, Courier, yadda yadda = +$12 - $35
(regional) Atty fees = bend over

Why all the variables? Size of the loan, competitiveness of the loan originator/lender, region of the country, type of property, status of credit and income of borrower. All these things can shift the service costs and fees up or down in unlimited ways.

Some day it may all be automated... but with the way the gubbermint is gumming up lending regulations, that day is looking farther and farther away.

Also... not "Closing Costs," but still cash-required for closing;
12 months prepaid homeowners insurance,
plus 2 months in your escrow account,
Forward period of months for tax period,
(for EACH taxing authority... again ugly in some regions,)

Any and/or all the above can be paid for by any of 3 parties;
1) Borrower,
2) Seller (unless it's a refi,)
3) Lender.

On a purchase, if the borrower pays, he can either do so in cash... or if it's a purchase he can "hide" it into the sales price by having the seller pay. That way it's built into the loan itself at preferable rates.

On a refi, the borrower can build it into the loan itself directly, thus accessing the cash required at preferred rates.

In any case the costs can be paid for by the lender by taking higher interest rates, thereby inducing lender rebates at closing. This works better on higher-amount loans, as a small percentage increase on a $400k loan will kick off much more capital for closing than a smaller, $150k loan. Smaller loans don't make sense, financially, to try to have lender paid (thus "no cost," or "no fee".)

Hope that clears it up a bit.
Dave Donhoff
Lic. Mortgage Broker
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