Closing Costs Explained
When purchasing or refinancing a home, you will undoubtedly run into a complex list of closing costs. These costs can range from ten dollars to thousands of dollars. So how do you know if the closing costs are fair or necessary? This guide should help you amswer all of your questions. If you would like a second opinion on your current mortgage application, just give us a call. We will run a no cost quote so you know what you are being charged compared to industry norms.
Property Related Fees
If you are purchasing a home, we highly recommend getting a home inspection. The
home inspection is not a bank charge but is a related expense that needs to be considered. The inspection is completed to determine any issues with the property. That could be structural, cosmetic, or even safety issues. Because this is an expense you will likely pursue on your own, we will not quote the cost here.
The appraisal is a standard part of the mortgage process. Whether you are refinancing or purchasing a home, the appraisal is likely to be required. An appraisal compares your property to other properties in the area to determine the value of the home. The value is needed by the bank to determine how much money they can lend you. The average cost of an appraisal is $400 but this amount does fluctuate based on property location. Any charge above $550 should come with a very good explanation! Is the property a multi unit property? Are two appraisals needed that increased the charge?
Additional property fees might include a water test or septic inspection. If the property has a private well and septic system and you are applying for a government backed home loan, it is likely these items will be required. The average cost for a water test is $75 and the average cost for a septic inspection is $150.
If you are purchasing a manufactured home, you can expect to pay additional charges for a structural engineer certification. The engineer cert, specifies whether the slab and property currently meet current building code. Examples include a concrete slab below the frost line and any addition built on the property that could impact the structural integrity of the home. The cost for an engineers cert is typically $200 – $375.