Unless you are buying and selling homes fairly often, sometimes the process becomes cumbersome and confusing. Let me help you better understand the process. All of your excitement and energy have been focused on finding your dream home and getting your home ready to sell. Most of your focus has been on acquiring your down payment and qualifying for your new mortgage and figuring out what your monthly payment will be. These are some items you may not have thought of and it is important to understand their purpose and the cost of each.
This fee covers the cost of a report that goes to the mortgage company to insure that your offer is appropriate and is based on the market value set by the sale of other properties in the residential area of the home you have a contract on. The appraiser can actually be helpful in making sure your investment is protected and that you are not paying too much for your property.
2. Home Inspection
The home inspector is a licensed professional who is making sure that your home is worth what you are paying for it and that it is structurally sound. The inspector is also looking for water issues, mold, a good working heating and cooling system, condition of roof and gutters and much more. The cost should be under $500. You will receive a copy of this report showing the status of the home and its working systems.
3. Application and Title Service Fees
The application fee is a fee covering the research to see if you are qualified for your loan. The material they acquire is your credit report and the rest of the fee is for your application to the mortgage company. The title service fee is for searching public records to see that there is a clear title on your prospective home with no liens.Each of these should be show on your closing forms....presented as a line item form.
4. Origination Fee for the Lender
This is a fee for the lender that you have chosen to make the loan. Included in this charge is processing the loan, funding the loan and underwriting the loan (and part of this is loan approval). This is based on a percentage of the loan.
5. Private Mortgage Insurance
This is a fee paid for insurance to actually protect the lending institution in case you go into foreclosure or default on your loan. This is determined in the event you put less than 20% down payment on your home loan. This is a percentage amount as well.
Since you have chosen to use a professional, you can ask up front what fees to expect once you have determined which home you are buying. This is an exciting time when you are purchasing your new home. I will make sure that you are informed to all fees to expect and that you are educated in the process. There should NOT be any surprises on the loan closing day!
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Brentview Realty 615.373.2814