What are Closing Costs?
Whether your lender calls them closing fees, mortgage closing costs, closing cost fees, mortgage closing fees, or another name, closing costs are generally not included in the purchase price of the home. Some closing fees may be universal, while others are specific to the town or state where you live. But they all add up and the more you know about them, the better prepared you will be when mortgage closing fees are discussed with the lender. Here is a list of the most common closing cost fees and why they occur:
Title policies
Also called title search and title insurance, title policies ensure that the property is being sold by the rightful owner and there are no liens, unpaid taxes, or other claims against the property.
Recording fees
These closing fees cover the administrative costs of creating and filing all the paperwork required to record the purchase of your home.
Inspections
Any fees associated with home inspections or any additional inspections required by local laws and regulations when a home is sold.
Courier charges
Also called courier fees, courier charges cover any costs associated with moving documents from one location to another, such as when a lender needs documents from the courthouse.
Appraisal fees
Before a lender approves a mortgage, they typically want the property appraised by an independent appraiser to determine the fair market value. Appraisal fees cover the costs of having the property appraised.
Survey fees
A lender or title insurance company may insist on a survey of the property to ensure that no structures have been built, encroaching on the property, or to verify the property’s boundaries. Survey fees are closing costs to cover the expense of someone having to survey the property before it is sold.
Mortgage closing fees generally range from 3 to 6% of the total amount of the
mortgage. It may seem like mortgage closing costs are merely attempts to nickel-and-dime the buyer right at the very end of the sale. However, mortgage closing fees cover all the incidental expenses that occur when any property changes hands. In most cases, the buyer pays the closing costs, but it all depends on the specific details of the purchase agreement.