Types of closing costs

Types of closing costs - Certain areas of the country may have added closing costs, but these are the general types of closing costs you might see at closing:

Attorneys or escrow fees
Property taxes
Pre-Paid Interest
Loan Origination fee
Recording fees
First premium of mortgage Insurance
Title Insurance
Loan discount points
First payment to escrow account for future real estate taxes and insurance
Paid receipt for homeowners insurance policy Underwriting fee
Tax service fee
Broker fee
Appraisal Fee

Always take your Good Faith Estimate with you to compare to the fee's on the final HUD statement. You want to make sure that there were no extra added fee's.

Recording Fees are the costs to record any documents that needed to be recorded at the county clerk's office. The most likely documents that are recorded are the mortgage agreement, the note, and the deed. Recording is often done by the title company.

The Settlement document containing the final closing costs or HUD may also be referred to as the HUD-1 or HUD-1A

It is a good idea to look at both the good faith estimate (GFE) and the truth in lending (TIL) when shopping for a mortgage.

The closing costs usually can be broken down into three basic areas. 1) Costs from the lender 2) Costs from the broker (if any) and 3) Costs from third party service providers and government agencies.

In states such as New York, one of the largest closing costs to be aware of is mortgage recording tax, a fee charged by your county. To determine how much mortgage tax will be payable at the closing of your mortgage refinance, contact us at (888) 529-5506 .

Always ask questions about any fees that you do not know what they are for, especially if you notice a big difference between the fees listed on your Good Faith Estimate and your final settlement (HUD-1) paper. Closing costs are generally broken down into a few categories: lender fees, mortgage professional fees, title fees, and state/county/city fees and pre-paid items (such as escrowing for taxes and insurance and prepaid interest). Understanding where the fees and costs are going will sometimes help to understand the necessity and reasons for some of the costs.

Closing costs are fees associated with any real estate loan transaction.

Federal law requires the lender to disclose all reasonable fees at the origination of the loan on a 'good faith estimate' within 3 days of application.

All actual closing costs are then again disclosed on the closing documents , commonly called the HUD .

On a purchase loan, the buyer can negotiate vender invoices to be included as seller closing costs to be paid out of escrow.

Whether or not you chose to escrow taxes and insurance is your option, and it often has an effect on the rate of the loan, so make sure to be clear to your broker on what your intentions are for payments of taxes and insurance.

What comparing closing cost between mortgage brokers and lenders it is also good to have the Truth N' Lending (TIL). Some lenders will have higher closing costs with a lower rate, and vice versa. The TIL will help you compare the cost the entire loan package between lenders.

Property taxes may be credited to you if they are paid in the back or you may have to pay the property taxes if they are prepaid in that particular state.

Always ask for a copy of the final Hud-1 24 hours from closing to give you a chance to look through the fees and compare.

Most closing costs are not set in stone, and are negotiable. Some closing costs may depend on which loan program you decide to go with, and or what interest rate you qualify for.

In most states, there are transfer taxes that must be paid at the time of a home purchase. These taxes are usually split between the seller and the buyer.

Prepaid interest is the interest per day that the lender charges for using the money. For example if you close on the 10th of the month you will pay interest for aproximately 20 days (in a 30 day month) for using their money for 20 days then on the first of the following month your interest will start to accrue daily for the full month. The purpose is so that when you make your first mortgage payment you are only paying the 30 days worth of interest and some to the principal compared to paying for 50 days worth of interest if you were not to pay the prepaid interest.

Consolidating Debt - Refinance or 2nd Mortgage? - Homeowners who need to consolidate their high interest unsecured debts often wonder what is the best way of doing it. Is it best to refinance your first mortgage or take out a second mortgage or Home Equity Line of Credit?

Recent increases in the Prime Rate have made the Home Equity Lines of Credit much less attractive than they were a few years ago.

For a free consultation regarding which debt consolidation options would be best for you, call me at (888) 529-5506.

Taking advantage of refinance programs which allow you to consolidate your debts and modify the rate and term of your first mortgage, such as adding a minimum payment option, can allow you to really boost your cashflow or focus your finances. We have had customers who were paying 2500 a month in mortgage + credit card & car payments drop down to making one minimum payment of 1100 dollars a month after debt consolidation refinancing. In the same situation, a second mortgage would have only reduced their total monthly spending to 2150 a month.

A good mortgage broker can work out a cost analysis breakdown for you to show you the pros and cons of refinancing your first mortgage to consolidate your debt versus taking out a second mortgage or home equity line of credit to consolidate your debt. One advantage of a home equity line of credit is that many times you can obtain one without any closing costs at all. In the right situations this can be very beneficial to a consumer instead of paying the closing costs on a first mortgage, especially if there is any chance of not keeping the loan very long or moving.

Typically home equity lines of credit are reported as revolving debt if the loan amount is under $50,000.00 (check with your local lender guidelines). Most home equity lines of credit are also interest only payments that adjust on a monthly basis which may make things even more difficult for a homeowner over the long run.

In that case, refinancing your debts into one mortgage may make more sense than obtaining a high interest, fixed rate second mortgage or a home equity line of credit.

Often you can get a lower combined rate and a lower payment by refinancing your mortgage instead of getting a 2nd mortgage or a home equity line of credit. Your mortgage professional can make these calculations for you.

One thing to watch out for. Many home equity lines of credit will report on the borrower's credit report as revolving debt rather than mortgage debt. This can often cause a substancial detriment to a borrower's credit score. Feel free to call me and I can help you determine how your HELOC is reporting. If it is reporting as revolving account, you should insist that the lender report it differently or refinance out of it.

In today's rising rate environment, Home Equity Loans, Lines of Credit and other short term interest rate-linked forms of financing are increasingly risky liabilities to have on your creditand your home. Consider consolidating all of your revolving and secondary debts into a single loan.

Don't use a home equity loan as a way to manage your outstanding debt. Instead, use it as a way to eliminate your debt entirely. Find a good mortgage broker that will show you how to use your monthly savings to pay off all of your debt, including your mortgage, in a much shorter period of time.