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Welcome Home: Understanding Closing Costs

Wallkill Valley Federal Savings & Loan explains what to expect when it comes to closing costs.
Wallkill Valley Federal Savings & Loan explains what to expect when it comes to closing costs. Photo Credit: Wallkill Valley Federal Savings & Loan

When moving to a home, costs tend to add up rather quickly. Several items will need to be budgeted for right away such as replacing carpet, updating appliances, moving and closing costs.

When buying a home the title of the property will be transferred from the seller to the buyer which is called the closing. The fees that need to be paid at that time are considered closing costs. Closing costs vary widely based on a number of factors and you will receive a loan estimate within three business days of receiving your completed loan application. Then three days before closing, you will receive a closing disclosure statement that will outline the closing costs.

How much are closing costs going to run?

If we are discussing the costs in general terms, anyone buying a home needs to put aside two to five percent of the loan for closing cost fees. So if your new home is $200,000 and you plan to put down 20 percent, setting aside $8,000 for closing costs should do the trick!

Below is a guide to the various items that are typically considered closing costs:

Application Fee - Usually around $150.

Bank Attorney Fee – Can range from $600 - $900.

Appraisal - Usually around $400.

Credit Report Fee – The fee is usually around $16 for an individual or $38 for a couple.

Flood Determination or Life of Loan Coverage – This fee of about $15.

Homeowners Insurance – The first year of your homeowner’s insurance coverage is often paid at closing.

Lender’s Policy Title Insurance/Title Company Title Search - Paid for doing a search of the property’s records to ensure that no one else has a claim to the property.

Prepaid Interest – You will be asked to pay the interest that will accrue from the date of the closing to the end of the month.

Private Mortgage Insurance (PMI) - If you’re making a down payment that’s less than 20 percent of the home’s price, you’ll be asked to pay PMI.

Property Tax – If you are going to pay your property taxes outright, then they will need to be paid at closing.

Recording Fees - Generally around $400.

Tax Service Fee – Generally $79.

Transfer Tax – New York State mortgage tax varies depending on county and loan amount.

Underwriting Fee – Is approximatly $200.

Sometimes there are other fees required at closing including:

• Escrow Deposit for Property Taxes and Mortgage Insurance

• Home Inspection

• Owner’s Policy Title Insurance

• Origination Fee

• Pest Inspection

• Survey Fee

Are you thinking about purchasing a home?

Wallkill Valley Federal Savings & Loan, an Equal Opportunity Housing Lender (NMLS#404992), would be happy to walk you through the entire loan process. Give us a call at 845-895-2051.