If you’re planning to purchase a home, most likely you’ll incur some type of closing costs. While you create a plan for your mortgage process, you’ll want to increase your knowledge of these costs to prepare yourself for closing day. Below we have outlined everything you need to know about closing costs so you can plan accordingly!  

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What are Closing Day Fees 

Buyers will pay 3-4% of the home’s purchase price in closing fees. These fees may include all third-party fees incurred during the mortgage process (home inspection, homeowner’s insurance premium, appraisal fee, credit report charges, attorney fees, etc.), which will be itemized on your Loan Estimate and Closing Disclosure.  

What is a Closing Disclosure 

Your Closing Disclosure will be in your email to you 3 business days before settlement. This document outlines all final terms of your loan and will itemize closing costs. This will also detail who pays and receives money at the closing table. It is crucial that you review this document thoroughly. Compare it to your Loan Estimate, sign, and return it in a timely manner. 

Download our Closing Day Fees Checklist!  

Property Related Fees 

  • Appraisal Fee: An appraiser will be sent to the property to determine the true value of the home. The buyer will have to pay for this at closing.  
  • Escrow Fee: An escrow is a third party that holds and controls money and assets. This is until all parties involved in the transaction meet certain requirements/ conditions. Having an escrow account ensures that you pay your property tax and homeowners insurance bills on time, automatically.  
  • Property Taxes: Start at the date of closing and continue throughout the year.  

Loan Related Fees  

  • Lender Fees: Typical lender fees can be an origination fee, processing fee, and an underwriting fee.  
  • Application Fee: Application fees are typically NOT refundable even if you do not get approval for the loan.  
  • Title Search Fee: The title search company will research the property’s history and area to give the “go” for the loan.  
  • Homeowners Insurance: Sometimes the homeowner’s insurance will require you to pay on closing day.  

Different Ways to Pay Closing Costs  

  • Pay from your personal checking or savings account: If you have the funds to do so, you can use your checking or savings account to pay costs at the closing. Just remember, these funds must be in your account for at least 60 days, before being able to use these for closing costs. 
  • Roll it into your mortgage: Depending on the loan, you can add closing costs into your mortgage loan. This is a great option for buyers low on cash, but be aware that you will pay interest on this amount over the years.  
  • Ask for Seller Credit: Conventional, FHA, VA, and USDA loans allow the option to ask the seller to cover part, or all the closing costs. This method is most common in a buyer’s market where the seller may not be receiving many offers.  
  • Use Gift Funds from Family: Your parents, relatives, or significant others can contribute to your closing costs with a gift fund. If you plan to use a gift fund toward the purchase of your next home, be sure to communicate with your loan officer to have the money sent directly to your escrow account. Download our FREE gift fund guide today!  
  • Apply for Government Assistance Programs: There are many programs for first-time homebuyers that provide a variety of grants (which may never have to be repaid). These can be used for a down payment or closing costs. * 

Post-Closing  

  • Update Your Driver’s License: Most states require you to update your address within 30 days of your move. We recommend setting a calendar reminder to follow up with your state’s MVA two weeks after closing. This will give you time to settle into your new home beforehand. 
  • Update Utilities: Changing the utilities into your name is best to do before closing, with the transfer date set as your closing date. This will ensure no lapse in service. At this time, you should also consider setting cable/internet installations. 
  • Forward Your Mail: Visit www.usps.com to update your address and set up forward mailing. You’ll want to update ASAP to ensure you don’t miss important mail. 
  • Update Your Address: Think about the businesses who have your old address on record (employers, banks, credit card companies, etc.). You’ll need to update your contact information with each business. Thankfully, most of the changes can be completed online!  
  • File for Tax Exemptions: Don’t forget to file your tax exemption 30 days after closing. This is important to control your property taxes.  

While closing on a home may seem a bit chaotic, we will be here to help you every step of the way. If you or anyone you know has interest in buying a home, contact Direct Mortgage Loans today! 

*Eligibility and approval is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral and underwriting requirements. Direct Mortgage Loans, LLC is licensed in Maryland. Direct Mortgage Loans, LLC NMLS ID# is 832799 (www.nmlsconsumeraccess.org). Direct Mortgage Loans, LLC office is located at 11011 McCormick Rd Suite 400 Hunt Valley, MD 21031. This is a paid endorsement. Equal housing lender.*