In an earlier article, we discussed the paperwork you will sign on closing day when you buy a house. Several costs will need to be paid at closing. In general, closing costs are split between the buyer and seller but can be negotiated at the time you make the offer to buy a house.

Fees paid to the lender when you buy a house include the loan origination fee for the administrative work required to process the loan paperwork. Sometimes, it is a flat fee or a percentage of the mortgage amount. Loan discount points, often referred to as just “points,” adjust the yield on the loan to current market conditions. One point is equal to one percent of the mortgage total. A fee is charged for an appraisal that the lender uses to value the property when you buy a house. Sometimes, this is paid when you apply for a home loan. It will be shown as POC or “paid outside closing” if that has happened.  You will also be charged a credit report fee that may have been paid during the loan application. And finally, you will pay an assumption fee if you take over the payments to buy a house on the seller’s existing loan.

You may have to pay some costs associated with the loan in advance. For example, you will most likely owe the interest total from the settlement date to the date when the first payment is due. This would be pro-rated for the number of days during that timeframe.  You may be asked to pay the first mortgage insurance payment or a lump sum of the first year’s premium.

When you buy a house, some monies will need to be put into escrow if the mortgage lender will pay property taxes, mortgage insurance, and homeowner’s insurance.

Fees paid to outside entities when you buy a house include the settlement, title search, title insurance, document prep, and legal fees. In most states, you must pay a tax on the property transfer and a recording fee to file the documents. Miscellaneous charges might include surveyor’s fees and fees for pest control.

Several adjustment costs are charged and must be paid at closing if the seller has made advance payments on things that will be the buyer’s responsibility once the sale is final. This includes property taxes.