Let's take a look at those items that the buyer usually pays:
- Appraisal and credit report fees
- When the lender does the appraisal on the property, the fee is charged to the buyer. An appraisal typically costs from $250 to $400. The credit investigation the lender does also is charged to the buyer and can cost from $10 to $35.
- Inspections
- The buyer will pay for the structural inspection of the home. These inspections cost from $350 to $600. If the buyer had any other inspections done, such as pest or termite inspections, water quality or radon testing, the buyer would pay those additional costs at closing.
- Mortgage recording fees
- Many states assess a mortgage recording tax for any mortgages recorded in their state. Typically, the tax is made up of several taxes added together and are based on the taxes that are in effect in the county or city where the property is located.
- Title insurance
- Typically the seller pays the VAST majority of the title fees (Title commitment and owner's policy costing $800-$1,000) in our market, but the buyer is responsible for around $100-$150 on their side of the title work.
- Attorney fees
- Not only do the buyers pay for their own attorney if they have one, but they also pay for the lender's attorney. Depending on how much work is involved, each of these attorneys could charge $650 or more.
- Lender fees
- There could be several fees the lender will charge the buyer. Here are just some of them – not all of which will be charged by every lender on every mortgage.
- Application fee – What the lender charges to process the application.
- Underwriting fee – What the underwriter charges for reviewing the loan application and approving the loan.
- Loan processing fee – What the bank charges to process the loan.
- Origination fee – What the lender charges for finding the loan - is equal to 1% of the loan amount.
- Loan lock fees – What the lender charges to lock in a specific interest rate for a specific period of time.
- Tax service fee – What the lender charges to monitor the escrowed payments of property taxes.
- Recording
- The fees associated with recording the deed.
- Private Mortgage Insurance (PMI), if applicable
- Buyers can sometimes get loans with a lower down payment if they agree to pay private mortgage insurance. The lender purchases the insurance from a private mortgage insurance company and then passes the cost to the borrower by charging a fee at closing plus an additional monthly fee while the insurance is in force.The lender will terminate the PMI payments once the loan has been repaid to a certain level. Federal law requires that any loans originated after July of 1999 must have the PMI terminated after the borrower has accumulated 22% of equity in the property and is current with all loan payments.
- Special fees, such as coop or condo fees
- Condominiums have special assessments due to the homeowner's association for maintenance of common areas. The buyer may owe the seller for services that were prepaid by the seller but will be used by the buyer.
The lists below will give you an idea of the items that are typically debited or credited to the buyer.
Buyer's Debits
- Contract sales price
- Credit report
- Recording of deed and mortgage documents
- Homeowner's insurance
- Other expenses, such as loan origination fee, closing fee, recording fee, attorney fees
Buyer's Credits
- Earnest money or deposit
- Loan amount
Let's look at some of the buyer costs in more detail.
