Estimating Your Closing Costs
An estimated closing cost is the most critical loan information a homeowner needs to have. A lender is required to give you a mortgage estimate at the time that you apply for a loan. This key document describes all loan information and the anticipated closing costs. The estimate is an itemized list of the closing costs based on the interest rate, loan type, property value and the homeowner’s income. It is essential that the homeowner has this document before shopping for a new mortgage or refinancing a current mortgage.
The calculator provides a comprehensive list of all mortgage interest fees as well as all lender fees. This includes the interest rate, loan type, property value and homeowner’s income. All of these items are based on a preset formula that is designed to give the homeowner an accurate reflection of their mortgage and associated costs at the time of closing.
Your buyer’s closing includes the estimate of attorneys’ fees, appraiser fees, title insurance premiums, and down payment. This total is called the closing cost by the seller, and it is legally required by law. If a buyer fails to pay his/her estimated closing costs, the seller must notify the lender in writing. In California, the lender must also provide a detailed written disclosure of all costs that were paid by the buyer under the CA Real Estate Code.
Two types of seller fees are included in the buyer closing cost calculator: the buyer’s move-in deposit and the attorney fee. The buyer’s move-in deposit is usually refundable upon complete of the contract, unless the contract is for a “post-closing” fee. If the contract is for a post-closing fee, the attorney fee may also be required. For more detailed information on these fees, please consult with your attorney.
The second type of closing costs calculator is the mortgage lenders’ closing charge. This fee is usually calculated by multiplying the buyer’s move-in fee and the total amount of the buyer’s estimated closing costs by the total number of days remaining on the contract or the amount of time left on the mortgage term. This calculator can be a bit tricky, so you should definitely consult an expert mortgage broker if you need this kind of information. For those who don’t want to hire an expert broker, the Internet can be used as a resource for this type of calculator.
Many consumers fail to include closing costs in their budget because they do not consider them costs at all. Closing costs are very important because they limit the amount of money you will be able to borrow after the closing date. They are also necessary because the mortgage lender requires a deposit before the house is transferred into the buyer’s possession. This deposit, called a loan-inclusion fee, is used to pay for the real estate attorney, appraisal, title insurance, and other miscellaneous charges associated with the mortgage transaction. A good real estate attorney can help you decide whether you will be able to meet these costs without incurring a loss, which is what many homeowners don’t realize.
The third type of fees that can influence your final price – and the amount you pay for the transaction – are your homeowner’s insurance. Most lenders require homeowners insurance on the property, so that if there is a fire, natural disaster, theft, or flood, the lender has protection against losses. It is wise to shop around and compare prices on this type of insurance before deciding on which company you will use. Be sure to ask about the lender’s policy on payment after the purchase is completed; many lenders will allow borrowers to make partial payments toward their closing costs until the funds are in place.
You should also take into consideration the fees that the mortgage lender may charge you once your contract is finalized and you have agreed to purchase a home. If the closing cost estimates offered to you do not include any fees, you may want to investigate whether the company will include these fees in their final loan estimate. Also, when you go to close on a house, you will probably be required to sign a Master Promissory Note, which is created by your lender and recorded in legal documents. If there is something in this document that you don’t understand, consult with a real estate attorney before signing. The Master Promissory Notes typically contains important information about the terms of the loan, including the interest rate and financing charges that will apply to the house purchase price, the closing cost estimates, and the property taxes that will be due.