Even before you are presented with the sheaf of paperwork
that accompanies the signing of your first mortgage, if you are a Metairie or
New Orleans first-time home buyer, you will have already learned about closing
costs—the fees and charges that pay for various parts of creating the mortgage loan.
Included in closing costs are sums that can vary from inconsequential (chump
change) to head-turners (“whaaaat th-?”).
You’ll want to be prepared in advance for what the line items cover.
That’s where the “Good Faith Estimate” comes in. It’s a detailed
document that is issued in advance; it’s a heads-up that estimates closing
costs you’ll pay when you buy your new Metairie or New Orleans home. The GFE
varies considerably from one lender to another although the overall costs tend
to be more predictable. It’s easier to think of closing costs as falling into
two general classifications—here’s a non-exhaustive listing of what each may contain:
Prepaid Closing
Costs
·
insurance
·
real estate taxes
·
prepaid interest
·
private mortgage insurance
These charges are collected to fund payments that will
become due at various times throughout the life of the mortgage. Funds are generally
paid into a temporary pass-through account (the “escrow account”) that gets
things going—later, you’ll find them included as part of the regular mortgage
payment.
Non-Recurring Closing
Costs
The other
charges included in Metairie and New Orleans closing cost calculations are the
one-timers: those that have to do with the creation of the mortgage. Among
them:
· Credit report - Fee paid to the lender for
compiling the borrower’s credit report from the various credit bureaus.
· Underwriting fees - Covering the cost of
evaluating and verifying your loan application based on the financial
information.
· Origination fee - This is the lender’s
charge for creating the loan: it can range from 1%-5%, depending on the type
and size of the mortgage.
· Appraisal fee - Is the amount charged to
determine the value of the property.
· Survey fees - The cost of verifying
property lines.
· Flood zone certification fee - The expense for verifying whether
the property is situated in a flood zone area.
· Title search fee – Pays for research into
whether there are outstanding liens or unsettled mortgage payments on the
property.
· Lenders title insurance – Insures the lender against
challenges to the ownership of the property.
· Recording fees - The amount charged by a
government agency for recording a real estate sale or purchase.
·
Discount points – An optional amount that you may choose to pay to decrease
the loan’s interest rate (and substantially lower your monthly payment).
By the time my clients reach closing, there aren’t any
surprises: all the i’s have been dotted and t’s crossed. That’s how it should
be: a closing is really the capstone to one of life’s momentous beginnings!
Terez B. Harris
Keller Williams Realty New Orleans
504 975 1033
TerezHarris@KW.com
TerezSellsNolaHomes.com
8601 Leake Ave., New Orleans, La 70118
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Terez B. Harris Terez Harris NOLA Real Estate Group 504-297-2619 www.TerezHarris.com
Keller Williams Realty New Orleans 8601 Leake Ave. New Orleans, LA 70118 504-862-0100
Keller Williams Realty New Orleans 8601 Leake Ave. New Orleans, LA 70118 504-862-0100
Each office independently owned and operated. All brokers and agents licensed in the state of Louisiana.
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