It will be very helpful to you to have an FHA loan closing cost estimator if you are planning to obtain an FHA loan.
Closing Costs
Knowing your closing costs in advance will help you prepare to have these funds available. You may be required to pay some costs upfront when you submit your loan application. Others will be paid when the buyer and seller go on closing day to exchange the necessary papers for the residence that is being legally transferred. Costs related to your application include the appraisal and the credit check. Appraisal costs to verify property value generally run around $350.00, although this amount varies depending on location. Generally, closing costs will be approximately two to three percent of the house sales price.
The FHA has implemented rules that help keep closing costs at a minimum for the buyer. The FHA's governing body is the U.S. Department of Housing and Urban Development (HUD). According to FHA.com, the specific costs and amounts that are "deemed reasonable and customary" are determined by each local FHA office. Other costs are generally paid by the seller when you buy a new home, or they are paid by the lender when refinancing your existing FHA loan.
Here is a list of things the FHA loan closing cost estimator (per the FHA website) may include:
- Attorney's fees
- Cost of title insurance and title examination
- Credit reports (actual costs)
- Deposit verification fees
- Document preparation (by a third party)
- Home inspection fees up to $200
- Loan origination fee
- Property survey
- Test and certification fees
- The appraisal fee and any inspection fees
- Transfer stamps, recording fees, and taxes
Additional items allowed in a FHA refinance loan include: wire transfer fees, courier fees, reconveyance fees, and fees to pay off bills.
What are Points?
Points are finance charges, which are calculated at closing. Each point equates to one percent of the loan amount. In other words, two points on a $100,000.00 loan equals $2,000.00. Companies may charge from one to three points in upfront costs, in addition to the down payment. The reason people pay points is because the more points you pay, the lower your interest rate will be. It is possible that you may be able to finance your points.
FHA Loan Closing Cost Estimator
MyFico has an online closing cost estimator that you can use to get an idea of what your closing costs will be. Provide the information requested to immediately get an estimate of FHA loan amounts, down payment, monthly payments, and closing costs for a home at a specific sale price. Be aware that many additional factors play a role in the loan qualification process, however, and your "estimation" is just that - an approximated number - not an exact figure.
True Closing Costs
Your real estate broker and mortgage professional will use an FHA loan closing cost estimator to give you the final true closing costs. This is part of their job so don't hesitate to ask them for any assistance you may need.
While generally it is the lawyer's office or title agency that prepares the settlement sheet or final closing statement, it actually usually falls under the real estate broker's realm of responsibility. Your mortgage professional should explain to you the exact costs that will be due when you submit your application as well.
