Here is a summary of some of the FHA closing costs associated with obtaining an FHA mortgage:
Appraisal Home Inspection Survey Origination Charge Discount Points Prepaids Title/ Escrow Fees Recording Government Taxes
Please note: As of January 1, 2010, once you receive your good faith estimate, the cost of your loan is locked in. The cost may come in lower, but cannot be higher. This is a wonderful improvement to the current environment which enables lenders to "bait and switch" borrowers and charge higher fees than disclosed. Also, it enables you as the consumer to comparison shop with confidence.
We at FHA Home Loan Help would welcome the opportunity to provide an honest estimate to you for your transaction.
Appraisal Fee: An appraisal is necessary on the home you are purchasing. Appraisals typically cost between $350-$425, and is one cost that you will incur prior to closing.
Home Inspection: Although a home inspection is not required by the lender, it is highly recommended to get the home you are purchasing inspected so you know about any potential problems before you buy the home. It is customary also to ask the seller to cover some of the expenses for the most important inspection items that come up on the home inspection either by having the repairs done prior to closing or offering monetary compensation to get the work done after closing.
Survey: In some states, it is required to obtain a new survey on the property or obtain an "improvement location certificate" which is similar to an update of a prior survey. In most states, a prior survey is sufficient with certification from the seller and title company that no changes have been made to the property since the survey was done.
Origination Charge: This is one of the items that will appear on your good faith estimate. The origination charge includes the broker's fee, credit report fees, lender underwriting fees, and processing fees. Essentially, any charges that come from your lender are lumped into this figure.
Discount Points: Discount points are a credit to you and are based on the interest rate that is locked in. This amount is deducted from your origination charge to arrive a net cost of obtaining your loan.
Prepaids: "Prepaids" are a general term that refers to mortgage interest, property taxes, and homeowner's insurance amounts that are collected at closing in advance of when they are due. For example, the entire first year's homeowner's insurance premium must be paid in advance at closing on a home you are purchasing.
Title/ Escrow Fees: This is a lump-sum fee that entails all charges associated with insuring your home's title and handling the closing process.
Recording: Cost associated with recording your deed with the county.
Government Taxes: Some states have government taxes associated with buying or refinancing a home. Some of this cost may be incurred by the seller.
To get your FHA closing costs questions answered, please fill out our quick quote form on the right. One of our FHA experts will be in touch shortly!
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