As a rule of thumb, closing cost to buy a home run about 2 to 4 percent of the purchase price. Much depends on the points and origination fees a lender charges to make the loan, which are disclosed on the buyer's GFE (Good Faith Estimate). Closing costs consist of four main categories of fees that you should recognize: 1. Origination Fees 2. Title and Closing 3. Government Fees 4. Prepaid Expenses Here is a breakdown of the closing costs, what each fee means, and how much the average closing cost is in the United States. The information provided is based on a $200,000 home loan amount in the United States. This is just the average, and your closing cost may be higher or lower depending on a lot of factors; including your loan amount, bad credit, or even if you are a first time buyer. 1. Origination Fees • Points - points you pay to buy down your interest rate. On average, for every point you buy in lowers interest rate by 0.25. (Average $715) • Application fee - lender’s cost to process your loan application. (Average $420) • Commitment fee - this guarantees a loan at a later date even though the credit is not being used at the time. (Average $560) • Document preparation - document prepared by the lender for getting you a loan. (Average $180) • Funding fee - money used to transfer your loan money. This is not used in Houston, Texas example. (Average $30) • Origination or lender fees - money charged by the lender for preparing your loan. (Average $1110) • Processing - money charged by the lender for processing your loan. (Average $365) • Tax service - money collected by your lender and placed in your escrow account and then it is put toward your property taxes. (Average $65) • Administrative Fee - usually covers document preparation. (Average $400) • Underwriting - fee charged for taking a risk with your home loan. (Average $245) • Wire transfer - money used to transfer your loan money. This is the same as funding fee in this example. (Average $30) 2. Title and Closing • Appraisal - used to determine the market value of the home to be purchased. It is also used by the bank to determine how much you can be approved for. (Average $325) • Attorney, closing or settlement fee - money used for preparing and evaluating papers for your home loan closing. (Average $345) • Credit report - money used by lenders to gather information about your credit history. (Average $12) • Flood Certification - insuring the property does not lie within a flood zone. (Average $12) • Pest, other inspection - money used for pest inspections and any other inspections necessary on the property. (Average $50) • Postage/courier - money used by the title company to transfer your papers. (Average $30) • Survey - used to determine the official boundaries of the property. (Average $175) • Title insurance - protects the title company as well as the buyer from anything missed in the title search. (Average $750) • Title work - money used to research the property at the courthouse. (Average $225) 3. Government Fees • Recording fee - money used to pay the county clerk to record the purchase of the property. (Average $97) • City/county/state tax stamps/intangible tax - tax charged to change ownership of the property. (Average $1365) 4. Prepaid/Escrow • Prepaid - items prepaid before closing. For example insurance premiums. (Average $1460) • Escrow - money set up in an account to be used to pay real estate taxes. (Average $700) |
 | |
Affiliations    |
Buyer's Closing Cost |