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What Are Closing Costs Made Up of and Who Are We Paying? What Are Closing Costs Made Up of and Who Are We Paying?(1)

What Are Closing Costs?

Closing costs are fees associated with settling any real estate and mortgage transaction.  It is critical to know how much your closing costs can be prior to entering into a real estate transaction or you may end up not even having enough to settle.   Whether you are purchasing or refinancing a home, you will usually get hit with costs from the lender, the title company, the appraiser, your attorney (on purchase transactions), among other parties.

Lender Related Fees:
These are fees directly and indirectly related to your obtaining a mortgage for your real estate transaction.  These can include but are not limited to the:  processing fee, underwriting fee, document preparation fee, closing fee, and a wire transfer fee.  Here is an explanation of each type of fee that is usually included in closing costs:

Third Party Fees:

Appraisal Fee:
Having your house appraised is essential, especially if you need a mortgage to purchase or refinance the property.  The appraised value is based on recent, comparable home sales in the area around the subject property and provides the lender with assurance that their collateral (the property) has sufficient value to support the loan they are giving you.  In the event of default, the lender would take over the property and try to sell it so its imperative that they know exactly what the market value is.  Generally the cost for a conventional appraisal in today’s market is about $400.

Credit Report:
When applying for any mortgage, the lender pulls a tri-merge credit report which shows your entire credit history from the three major credit rating agencies:  Trans Union, Equifax, and Experian.  Most lenders will use the middle score of the three for qualification purposes.  The cost for this credit report can range from $12 – $35 depending on the lender.  They usually determine their cost by the average total cost of credit reports vs the total amount of actual funded loans.

Title Company Fees:
Title fees usually represent the largest cost in any real estate transaction, especially on purchase transactions.  Title company fees are usually made up of title insurance, closing/settlement fees, wire transfer fees, and recording charges.  The title company may also charge a fee for a survey to be done if there is not one on public record, as well as expensive “transfer taxes” and/or mortgage taxes, depending on your local market.  Total title charges can be as cheap as $500 on a conventional refinancing, all the way up to $2000-$4000 for title insurance alone depending on your loan amount and what area you are buying the property in.

Attorney Fee:
Finally, most home buyers hire a real estate attorney to help them ensure an accurate purchase transaction takes place and that there are no critical errors in the documentation.  Real estate attorneys typically charge $500-$700 in most markets for overseeing a residential real estate purchase transaction.

In conclusion, its very important to consider all closing costs involved in any real estate transaction and to always review the Good Faith Estimate closely before ultimately choosing the lender.

Author “Joe Mortgage” is a marketing and advertising leader who is owner of and is focused to bringing readers with relevant as well as valuable advice. Find out more about the following weblink for a 100 % FREE refinance consultation and skilled counsel on how to correctly calculator your closing costs.

HARP 2.0 Mortgage Program – What are the benefits of the program? HARP 2.0 Mortgage Program – What are the benefits of the program?(3)

HARP 2.0 – What are the

benefits of the program?

Everyone we know seems to be talking about the new “HARP 2.0” program which is the newest edition of government-sponsored mortgage relief.  So what can HARP 2.0 do for you?  In short, this newer version improves on the initial HARP program by removing the 125% LTV limitation.  In plain terms, many folks who couldn’t qualify for the first edition of HARP because their homes are horribly under water would qualify now.  Other new features of HARP 2.0 include reduced pricing hits at these higher LTV’s for shorter term loans (15yr fixed) and transferable PMI, but the key enhancement of HARP 2.0 is definitely the no-limit LTV.

HARP 2.0 – Tip#1:  How to know if you qualify:

There are a few key requirements to qualify for the HARP 2.0 program.  First, to qualify for HARP 2.0, your mortgage must currently be insured by Fannie Mae(DU Refi Plus) or Freddie Mac( known as “Open Access”).  Next, you need to have been making your mortgage payments on time to qualify for HARP 2.0.  Finally, the loan had to close on or before May 31, 2009.  One additional requirement for HARP 2.0 is that you cannot have already refinanced using the original HARP.

HARP 2.0 – Tip#2: Relaxed underwriting guidelines.

One additional benefit of the HARP 2.0 refinance program is the somewhat relaxed underwriting guidelines.  Specifically, the guidelines related to late mortgage payments on your existing loan.  Under the new HARP 2.0 program, you can actually have paid your existing mortgage late one time within the last 12 months, as long as the late payment occurred more than six months ago.

When you compare mortgage rates for a HARP 2.0 refinance, the most important factor is  talking to a lender that is an expert in the HARP 2.0 guidelines.

HARP 2.0 – Tip#3: What does this mean to the industry?

One thing is for sure, this new HARP 2.0 program should definitely help kick-start the mortgage industry a bit while also helping many homeowners enjoy month savings that come with historically low interest rates who otherwise would not be eligible to refinance.  While there will likely still be millions of homeowners still left high and dry, this updated version of HARP looks like it will help some folks who need relief the most:  those who are seriously upside-down on their mortgage.

Author Joe Karns is sales and marketing leader and master of the HARP 2.0 is dedicated to bringing his subscribers relevant and useful information. Want a free mortgage checkup? Check out Joe Karns at the following link for more a FREE refinance consultation and expert advice on finding the Best Refinance Lenders. Or, click here for a free quote on a  HARP 2.0.

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