Explanation of Costs
Listed below is a brief explanation of costs that are typically paid by the buyer.
The fees listed on this page are only estimates and are not guaranteed to be accurate. You should contact your lender and the title company for the actual costs.
Loan Origination: An origination fee is a fee charged by a lender for processing a new loan application and is compensation for putting the loan in place. This is usually a percentage of the loan amount. In the example to the left we are using 1% of the loan amount, however it could be higher or lower.
Doc Stamps: This is a tax imposed on certain documents executed, delivered, or recorded. This includes documents that transfer an interest in real property, such as deeds and written obligations to pay money, such as promissory notes and mortgages. The cost for doc stamps for a mortgage is $0.35 per $100. The cost for a mortgage of $100,000 would be $350.
Intangible Tax: This is a nonrecurring tax on intangible personal property levied on obligations for payment of money which are secured by mortgage or other liens upon real property. The cost is $0.20 per $100 of the mortgage amount. A $100,000 mortgage would cost $200.
Property Taxes: Property taxes are paid in arrears so the buyer will receive a credit at closing from the seller for the taxes the seller is due to pay from January 1st to the day prior to closing. Lenders will require the buyer to pre-pay a portion of the property taxes which could be an amount equal to 3 to 6 months worth of property taxes. The calculation to the left utilized 3 months (90 days).
Homeowners Insurance: Lenders will require the buyer to have homeowners insurance paid at closing for the first year and typically an additional 2 to 3 months. The cost of homeowners insurance is calculated to the left as an estimated cost of 1.5% of the price of the home with an additional 3 payments required. For example a $200,000 x 1.5% = $3,0000 / 12 = $250 per month x 15 months = $3,750.
Lender's Title Insurance: This protects the lender against loss or damage occurring from liens, encumbrances or defects in the title or actual ownership of a property. The seller typically pays for the owners policy and the buyer pays for the lender's policy which a discount is typically given if the policies are purchased from the same title company. The amount calculated to the left is based on a discounted amount.
Appraisal: To obtain a home loan the lender will require an appraisal by a state certified appraiser to estimate the value of the home you purchase. The cost is typically $400 to $600.
Tax Service Fee: A tax service fee is paid by the borrower to the lender who then hires a tax service agency to ensure that a mortgaged property's property taxes are paid on time. The tax service agency is to alert the lender on any delinquent property taxes found in order to prevent tax liens from existing against the mortgagors' homes.
Survey: A real property survey report is a legal document that clearly indicates the location of all improvements relative to a property's boundaries and generally contains an illustration of the physical features of the property and a written report detailing the surveyor's opinions and concerns. The survey makes you aware of any potential boundary disputes. The cost is typically $300 to $400, but could be higher if it is a large or complex property.
Flood Cert: A flood certification is a document that states the flood zone status of real property. If the property is located in a flood hazard area the lender will require flood insurance.
Pest Inspection: Some lenders will require a termite inspection. Some companies will do this for free or a low fee in hopes that you will hire them as your pest control company.
Closing Fee: Fee for processing title, coordinating closing, preparing closing statement, etc. This fee varies, however is typically $250 to $750 for the buyer.
Recording Fee: Fee to record documents such as deed and mortgage with county.