Once you’ve found a home, successfully negotiated an offer and are under contract, you will be responsible for various closing costs during the transaction’s escrow period (typically 30-45 days) and on closing day. We want you to be familiar with these costs and what some of the common fees a buyer in Albuquerque can expect to pay.
Items charged by your lender (if you are getting a loan). These will be on the Good Faith Estimate the lender gives you when you apply for the loan. Except for the appraisal and credit report, these items are typically paid all at one time, at closing, along with your down payment:
· Appraisal Fee: This fee pays for the appraisal of the property. You may already have paid this fee at the beginning of your loan application process.
· Credit Report Fee: This fee covers the cost of the credit report requested by the lender. This too may already have been paid when you applied for your loan.
· Loan Origination Fee: This fee covers the lender's loan-processing costs. The fee is typically one percent of the total mortgage.
· Loan Discount: You will pay this one-time charge if you have chosen to pay points to lower your interest rate. Each point you purchase equals one percent of the total loan.
· Title Insurance Fees: It is customary in Albuquerque for the seller to pay the majority of these fees, such as the closing fee and a standard owner’s title policy, however your lender may require some additional coverages and endorsements to the title policy, which you will be responsible for, as well as some additional costs for legal document preparation, wire and courier fees.
· PMI Premium: If you buy a home with a low down payment, a lender usually requires that you pay a fee for mortgage insurance. This fee protects the lender against loss due to foreclosure. Once a new owner has 20 percent equity in their home, however, he or she can normally apply to eliminate this insurance.
· Prepaid Interest Fee: This fee covers the interest payment from the date you purchase the home to the date of your first mortgage payment. Generally, if you buy a home early in the month, the prepaid interest fee will be substantially higher than if you buy it towards the end of the month.
· Escrow Accounts: The lender will usually start an account that holds funds for future annual property taxes and home insurance. At least one year advance plus two months’ worth of homeowner's insurance premium will be collected. In addition, taxes equal approximately to two months in excess of the number of months that have elapsed in the year are paid at closing. (If six months have passed, eight months of taxes will be collected.)
· Recording Fees: This expense is charged by the county to recording the purchase documents.
Additional buyer costs during the transaction (not lender or mortgage-related):
· Inspections: As a buyer, we encourage you to have any and all property inspections you would like during the inspection period. We’ll discuss all of the available options with you and help you decide which ones are important to you. We can provide you with a list of qualified inspectors and once you decide who you would like to hire, we’ll set up all of the inspection appointments for you. Total inspection costs typically range between $500 and $1500 dollars (but can be higher depending on what inspections you choose), and must typically be paid at the time the inspections are completed.
