Miscellaneous Costs & Fees -
An estimate of $300 should be considered to cover other
items such as recording fees and document preparation, as
well as allowing for variations from these other estimates.
Hazard Insurance Reserve - If
hazard insurance is to be paid monthly to the lender, a
portion of the next premium is collected for the escrow
account in order to ensure that enough money is impounded to
pay the premium when it comes due. The buyer will usually
need to either provide or pay for coverage for the 1st year.
Recording Fees - Charges by
the County Recorder to record deeds, mortgages,
satisfactions of mortgage or other documents required to
clear or transfer title are collected by the closing agent.
In Utah County the cost is $20.00 for each document and each
party may be required to record one or more documents,
depending on the transaction.
Prepaid Interest - A borrower
often must pay interest from the date of closing to 30 days
prior to the first regular mortgage payment.
Mortgage Insurance - Mortgage
Insurance usually is required on conventional loans greater
than 80% of appraised value. The cost may range from 1/2% to
1% per year and 14 months premium is often collected in
advance. This is coverage for the lender in case of default.
The premium is paid by the buyer.
Tax escrow (impound) - If the
new loan is going to have an escrow account for the payment
of taxes and insurance, the lender will require from 2-10
months taxes to be deposited at the time of closing,
depending on when the next taxes or insurance need to be
paid out of the escrow account. These sums are paid by the
buyer/borrower.
Closing Fee - Closing fees
are paid to the closing agent for closing the transaction.
These fees range from $100 - $140, depending on the
complexity of the closing. Usually the buyer pays a fee to
close a loan if there is financing and a seller pays a fee
for the work needed to transfer ownership of the land to the
buyer. Each party may hire their own closing agent, though,
to ensure that their part of the transaction is properly
handled. Or the parties may choose to hire the same closing
agent to close both the seller's and the buyer's portion of
the transaction.
Closing Cost Definitions Part I