Know your mortgage closing costs

 

Part 2 of Empty nesters move out of suburbs

 

HONOLULU ADVERTISER , July 17 2005

BY LISA SCONTRAS

Custom Publishing Group

 

Closing costs can add up quickly, with each line item ranging anywhere from $15 to hundreds, even thousands of dollars. These fees — which are in addition to the down payment requirement — are necessary to facilitate the legal transfer of ownership. Mortgage closing costs are specifically associated with getting a loan and include the following:

• Loan Origination Fee — Fee to cover the administrative costs of processing the loan

 

• Loan Discount Points — Sometimes lumped together with the loan origination fee, discount points refer to a fee you can opt to pay in order to effectively purchase a lower interest rate. Generally one point is one percent.

 

•  Appraisal Fee — The lender will want to have the property appraised to determine if the price you are willing to pay is justified by supporting comparable properties.

 

•  Prepaid Interest — Buyers are required to pay in advance the interest that is to accrue on the loan from the date of settlement to the first monthly payment.

 

• Credit Report Fee — Every lender will likely obtain a credit report detailing how you have handled credit transactions in the past and to determine if you are a good credit risk.

 

• Document Preparation — This fee covers the cost of preparing the final legal documents required for closing.

 

The above costs are not all-inclusive and most real estate transactions may include other fees, depending on the type of loan, the land tenure and the negotiated contract. There are escrow fees as well, which will include homeowner’s insurance and property taxes. Read your contract, talk to your lender and ask your Realtor to answer any questions.

 

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