Closing Fees: Do You Know Where Your Money Is Going

By Debbie Wilson Columnist

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Upon closing your new home loan, you'll find yourself paying various fees and charges. And since closing is the time you sign your paperwork, pay these closing fees, and take ownership of your new home, it is important that you understand what these costs entail as well as their financial impact. In general, these closing fees can be broken down into 3 groups: lender-related fees, third-party fees, and pre-paid fees. It is the third-party fees that tend to be the most negotiable and thus worthy of your attention.


Third Party Fees

Most third-party fees are collected by your lender for services provided. Some closing fees are regulated by government organizations, while other are optional. Typically, all lenders will require some of these mortgage fees.

What Are Third Party Fees?

While many third-party fees vary from mortgage to mortgage, the following represent the most common ones for new home loans:
  • » Appraisal Fee - Payment for an estimate of fair market value of your home.
  • » Credit Report Fee Covers the cost to obtain your credit reports which are used to determine creditworthiness.
  • » Mortgage Insurance - Payment for an insurance policy based on new home loan protection.
  • » Tax Service - Fee that covers payment of your property taxes to prevent delinquency.
  • » Hazard Insurance - Premium for an insurance policy to protect you from risks such as flood, fire, storm, etc.
  • » Title Search - Fee covers public record for liens or other problems against property in question.
  • » Title Insurance - Premium for insurance policy which protects you if unresolved title claims are later discovered.
  • » Attorney Fees - Pays closing agent or attorney for handling the close of your new home loan.
  • » Recording Fees - Pays for public record documentation and transfer of ownership paperwork.
  • » Survey Fees - Payment for verification of property boundaries, dimensions, and contour.
  • » Notary Fee - Covers cost of licensed notary public signature on closing documents.
  • » Inspection Fees - Pays for property, pest, septic tank, and other related inspections.
Don't get caught uninformed. Know you rights and know your closing costs. It's up to you to keep third-party fees honest and fair.


About the Author
Debbie Wilson owns and operates a lakeside resort. Her previous experience includes profitability consulting for a national healthcare company. Debbie holds a B.A. in Business Management with a minor in Physical Education.

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