Mortgage Basics
Closing costs refer to the fees and expenses associated with the final stage of a real estate transaction when transferring ownership of a property from the seller to the buyer
Lender Fees
Loan Origination Fee: The fee charged by the lender for processing your mortgage application, typically ranging from 0.5% to 1% of the loan amount.
Discount Points: Optional fees paid to lower the mortgage interest rate. One point equals 1% of the loan amount and can reduce monthly payments over time.
Underwriting Fee: Covers the lender’s cost of evaluating your financial profile and ensuring you meet loan qualifications.
Title and Legal Fees
Title Search: A review of public records to verify legal ownership and ensure the property is free from liens or disputes.
Title Insurance: Protects the lender and, optionally, the buyer from potential ownership claims or errors in the title process.
Attorney Fees: If required in your state, an attorney may review documents and facilitate the closing process. Fees vary by location.
Government and Recording Fees
Recording Fee: Charged by the local government for registering the property sale and mortgage details in public records.
Transfer Taxes: A tax imposed by the state or local government based on the property’s sale price or loan amount.
Property Tax Prepayment: Buyers may be required to prepay property taxes for a specific period before taking ownership.
Prepaid Costs and Escrow Requirements
Homeowner’s Insurance: Lenders typically require the first year’s premium to be paid at closing to protect the property from potential damage or loss.
Escrow Deposits: Funds collected in advance to cover future property tax and insurance payments, ensuring there is enough to pay these expenses on time.
Prepaid Interest: The interest due on the loan from the closing date until the first scheduled mortgage payment.
Other Possible Costs
Appraisal Fee: Covers the cost of a professional assessment of the home’s market value to ensure it aligns with the loan amount.
Home Inspection Fee: If a home inspection is conducted, the fee for evaluating the property’s condition may be included in closing costs.
HOA Fees: If purchasing a home in a homeowners’ association (HOA), buyers may need to pay prorated dues or special assessments at closing.
Understanding Your Closing Disclosure
Three days before closing, buyers receive a Closing Disclosure outlining final loan terms, monthly payments, and exact closing costs. Reviewing this document carefully ensures there are no unexpected fees or discrepancies before finalizing the purchase.
Your Goals. Your Home. Your Brightside.
Home financing should feel empowering, not overwhelming. At Brightside Mortgage, we’re committed to helping you achieve homeownership with confidence, clarity, and peace of mind. Let’s turn your homeownership dreams into reality—together.
