Buying a home is often times the biggest purchase and investment an individual will make in their lifetime. However, finding the perfect home is just the first step in the process. Following an accepted offer of a home, you will be tasked with choosing a mortgage lender, selecting an attorney (if you so choose), and complying with all the terms and conditions of the Real Estate Contract. With that being said some fees that may be seen on your Closing Disclosure and Master Settlement Statement. Please be advised, these fees change from Mortgage Lender to Mortgage Lender and Title Company to Title Company. Meaning, depending on the Mortgage Lender you may see additional fees or some fees below may be missing. The below is to be used as a representation of fees typically seen.
Processing fee – as low as $70 and up to $395 – The processing fee covers the aspect of the loan where the Mortgage Lender gathers all of the documentation necessary in order to determine whether you are eligible to receive the loan. These documents include: W2’s, bank statements, employment verification, etc . . . This process also involves the Mortgage Lender’s manpower to obtain credit reports and appraisals, among other necessary documentation (e.g. Divorce documentation, bankruptcy filing/discharge). The documentation is a pre-requisite for underwriting.
Tax Service – as low as $35 and up to $85 – Following your closing, you will be responsible for the property taxes moving forward. Your Mortgage Lender will advise you can open an escrow account that will cover payments regarding Homeowner’s Insurance, property taxes, and payment of interest/principal on your loan. The Tax Service Fee covers the service the Mortgage Lender will provide to insure payment of property taxes have been made and credited to the correct parcel of land associated with your property.
Underwriting – Typically around $500 – $700 – The underwriter is responsible for reviewing all of the documentation received from the processing fee above. The underwriter reviews all documents in order to insure the Mortgage Lender is making a “safe” loan. Meaning, if someone is unemployed and claiming bankruptcy, the underwriter would likely deny a loan for One Million Dollars.
Appraisal – Typically around $350 – The Mortgage Lender will require an appraisal be completed of the purchase of your new home. This cost is variable and dependent on the square feet of the home. The appraiser will review your home and also comparable homes in the area to determine whether you have purchased your home comparably to the fair market value of the other homes in the area.
Flood Certification – as low as $10 and as high as $35 – Federal law requires a home that is located in a flood zone obtain Flood Insurance. Your Mortgage Lender will certify whether or not the home is located in a flood zone.
Pre-paid interest – variable based off loan – Your first mortgage payment will typically not be due until the month following your closing. This fee is payment of the interest on the money you have borrowed between the month of closing and your first payment.
Wire Fees – Typically $40 – $50 – Your Mortgage Lender will wire the funds from your loan to the Title Company who is handling the Residential Real Estate Closing. The Funds are wired through the Federal Reserve System and is originated from a commercial bank.
Predatory Lending Database Certification – $50 – Pursuant to State and Federal Law of Illinois, a certificate of compliance will be required for any new loan on real estate dated or executed after July 1, 2010. See 765 ILCS 77/70. If a certificate is not present, the loan will be rejected by the County Recorder’s Office.
Chain of Title – $250 – Verifies the title history for the prior 24 months prior to your purchase. For an explanation of why Title is important.
Closing Protection Letter – $50 – Illinois Law requires the Title Company utilized to demonstrate they are insurable. The closing protection letter protects the addressee if funds are lost, stolen, etc . . . See 215 ILCS 155/16.1
Electronic Package Processing and Handling – Between $25 and $40 – The Mortgage Lender and Title Company will be required over-night documentation back and forth to one another.
EPA Endorsement – around $195 – Protects the Lender from loss that may occur due to any environmental liens on the home.
Illinois Policy Fee – $3 – Illinois legislation imposes a fee on the issuance of any title policy. See 215 ILCS 155/14.
Gap Risk Endorsement – around $150 – The recording period of a deed can take up to several weeks and the Gap Risk Endorsement is designed to protect against issues such as: insurance claims or other issues that may encumber a buyer’s rights to quiet possession and enjoyment of their newly purchased home.
Lender’s Title Insurance – $500 – The Lender’s Title Policy acts as a policy of insurance against any claims of defect on title.
Closing Fee – Typically $1,000+ – this is the fee of the escrow agent from the Title Company to complete the closing.
Recording Fee – Variable, typically around $150 – These are the fees associated with recording your Deed and Mortgage with the appropriate County Recorder.
Homeowner’s Insurance pre-paid – Variable dependent on insurance company – During your loan process, you will have the option to pay your Homeowner’s Insurance outside of closing or pay it as part of your closing costs.
Attorney fee – As low as $500 and as high as $800 – The fee associated with your attorney reviewing the Residential Real Estate Contract, negotiating during attorney review and home inspection, and appearing at the closing to perform the closing.
Home Owner’s Association Documents –Variable dependent on HOA, typically $100-$300 – Some HOA’s will require the purchaser of a new condo/townhouse to purchase the Rules, Regulations, By-Laws, etc . . .
Home Owner’s Association Move in fee –Variable dependent on HOA, typically $100 – $200 – Some HOA’s will require a onetime move in fee.
While the fees appear to be daunting you are not stuck with all the fees. Your lender, an experienced real estate agent and attorney will work to obtain credits on your behalf to reduce the burden. Here is the percentage of credits you can request:
FHA Mortgage – up to 6%
Conventional – up to 3%
You can also visit the link below for an estimate of closing costs:
Nothing stated or implied on this page should be construed to be legal, tax, or professional advice. This page should not be interpreted as creating an attorney-client or legal adviser relationship. For questions regarding your specific situation, please contact The Law Office of Al Beaudreau, Ltd. at 708-460-7688.
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