Specific Settlement Costs
When shopping for a loan, it is important to keep in consideration specific settlement costs that are offered by various lenders. The dollar value of settlement costs can raise the cost of your loan, so it is important that you be deliberate when looking at specific settlement costs. These settlement costs are often required and they are itemized in Section L of the HUD-1 Settlement Statement for your referral.
These specific settlement costs include:
Sales/Broker's Commission: The seller is typically responsible for paying the total dollar amount of the real estate broker's sales commission, which is generally a percentage of the home's selling price. Items Payable in Connection with Loan: These costs are accrued based on the lender's fee for process, approving, and making a mortgage loan. There are many fees associated with these costs and they include: Loan Origination Fee, Loan Discount Fee, Appraisal Fee, Credit Report Fee, Lender's Inspection Fee, Mortgage Insurance Application Fee, Assumption Fee, and Mortgage Broker Fee. Items Required by Lender to Be Paid in Advance: These costs are related to certain items that may have to be prepaid at the time of settlement. These fees include: Accrued Interest, Mortgage Insurance Premium, Hazard Insurance Premium, and Flood Insurance. Escrow Account Deposits: These payments make up the costs involved in setting up an escrow account, which is used to pay taxes, insurance, and other items on a monthly basis. Examples of the fees involved in Escrow Account Deposits are: Hazard Insurance, Mortgage Insurance, City property taxes, County property taxes, Annual assessments, and Aggregate Adjustment. Title Charges: These costs are used to cover the various services performed by title companies and other title related services. These fees include: Settlement or Closing Fee; Abstract of Title Search; Title Examination; Title Insurance Binder; Document Preparation; Notary Fee; Attorney's Fees; Title Insurance; Lender's Title Insurance; and Owner's Title Insurance. Government Recording and Transfer Charges: These fees are related to costs accrued to the government recording and transfer section of home selling. Depending on how it was stipulated in the Agreement of Sale, they are either paid by the buyer or seller. These fees include: Recording Fees of the Deed, Mortgage, and Releases; City/County Tax/Stamps fees; and State tax/Stamps fees. Additional Settlement Charges: These additional fees accrue based on services that are required but do not fall under the other classifications of required settlement costs. Examples of Additional Settlement Charges are: Surveyor's fee; Pest inspection costs and possibly pest infestation costs; and lead-based paint inspection fees.
