Common questions about closing costs, answered by Mike Swaleh.
What are closing costs?
Typically lender fees, appraisal, credit report, title insurance and settlement fees, recording fees, prepaid interest, the first year of homeowners insurance, and the initial escrow deposit. Worth knowing: the escrow and prepaid portions are not fees – that is your own money for your own taxes and insurance, just moved forward in time. I cannot quote amounts, but Mike will give you them in writing – on a purchase or refinance that is a Loan Estimate.
Can the seller pay my closing costs?
Often yes – seller concessions are common and are limited by program, occupancy and down payment size. It is a negotiating point in the offer, so it is worth knowing your limits before you write one. Mike can tell you what your program allows.
Can I roll closing costs into the loan?
On a refinance, generally yes. On a purchase, generally no, with some exceptions. There is also the lender credit route, where you accept a slightly higher rate and the lender covers costs – useful if you are short on cash but comfortable with the payment. Both have trade-offs Mike can lay out.
What is a Loan Estimate?
The Loan Estimate is a standardized three-page disclosure of your estimated terms and costs, which you receive within three business days of a completed application. The Closing Disclosure is the final version, which you receive at least three business days before you sign. Both are designed so you can compare lenders on identical terms. They apply to purchase and refinance loans; a HELOC is disclosed differently, so ask what you will get and when.
What is earnest money and do I lose it?
Earnest money is a good-faith deposit that goes toward your purchase at closing. Whether it is refundable depends on the contingencies in your contract – financing, appraisal and inspection contingencies exist precisely to protect it. That is contract territory, so your agent and if needed an attorney are the right people, not me.
Mike Swaleh, Area Manager · NMLS #739145 · Fairway Independent Mortgage Corporation, NMLS Entity ID #2289
436 Lincoln Boulevard, Suite 105, Lincoln, CA 95648 · mswaleh@fairwaymc.com · Licensed in AZ, CA, CO, FL, GA, IL, KY, MO, NV, NC, OR, SC, TN, TX, WA
This information is not intended to be an indication of loan qualification, loan approval or a commitment to lend. Other limitations may apply. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates, and programs are subject to change without prior notice. All products are subject to credit and property approval. Not all products are available in all states or for all dollar amounts. Fairway is not affiliated with any government agencies. Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, License No 41DBO-78367.
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