Introduction to Closing Costs

When purchasing a home, understanding closing costs is crucial. Kevin Retcher of First Meridian Mortgage recently addressed a common inquiry: the closing costs associated with a $750,000 purchase in Northern Virginia, with a 20% down payment. Let’s delve into the specifics.

Lender Fees:

Lenders may charge several fees:

  • Origination Fee: This is typically 1% of the loan amount. For a $600,000 loan, that equates to $6,000 if charged.
  • Processing and Admin Fees: While some lenders, like Kevin’s company, waive processing fees, an admin or underwriting fee can average between $750 and $1,200.
  • Loan Discount Fee: Optional fees that can lower your interest rate over time. Consider these if you plan to keep the loan long-term.

Other Relevant Fees:

  • Appraisal Fee: Often necessary, though some waivers might be available depending on the loan specifics.
  • Credit Report Fees: Recently increased to $74, with further hikes anticipated.
  • Tax and Flood Services: Ensure timely payment of property taxes and assess flood risk, respectively.

Title Company Costs:

Homebuyers often overlook costs related to title companies:

  • Settlement Fees and Lender’s Title Insurance: These can vary widely. Kevin advises vetting several providers to find the best rate, as these fees represent a significant portion of closing costs.

Prepaid Items:

While not technically closing costs, prepaid items affect overall cash flow. They include property taxes and homeowner’s insurance, which need to be covered in advance to establish escrow accounts.

Kevin’s Expert Tips:

  • Comparative Shopping: Always get multiple quotes from different title companies and lenders to ensure competitive pricing.
  • Use Available Tools: Many title companies have online calculators for estimating costs.

Final Considerations:

Kevin concludes by stressing the importance of approximating these costs based on location and specific home purchase terms. His insider tips offer a roadmap to potentially reducing closing costs by leveraging competitive quotes and selectively paying certain fees upfront.

In wrapping up, Kevin highlights his network of vetted brokers across various states, ensuring robust support for clients nationwide, whether in VA, D.C., Maryland, or beyond.

By understanding these essential components, homebuyers are better positioned to manage their finances effectively and secure their dream homes with confidence.