Closing costs are fees associated with your home purchase and home loan at the closing of a real estate transaction. The closing point is when the title of the property is transferred from the seller to the buyer. Closing costs are incurred by either the buyer or seller.
The following is through a conventional loan or FHA loan, through the NACA program you will NOT have to pay the majority of these costs.
What fees can you expect at the closing table?
Closing costs will vary depending on where you live. Each loan varies in which fees will or will not be present. Here is a list of what you will commonly see referred to as closing costs:
- Application Fee: This fee covers the cost for the lender to process your application. You do not pay this through the NACA program.
- Appraisal: This is paid to the appraisal company to confirm the fair market value of the home. You do not pay this through the NACA program. The lender pays this.
- Closing Fee or Escrow Fee: This is paid to the title company, escrow company or attorney for conducting the closing. The title company or escrow oversees the closing as an independent party in your home purchase. You do not pay this through the NACA program.
- Courier Fee: This covers the cost of transporting documents to complete the loan transaction as quickly as possible. You do not pay this through the NACA program.
- Credit Report: You do pay this through the NACA program, typically about $12 or so. Your credit score will not be checked, just your report.
- Home Inspection: You will be required to obtain a home inspection through the NACA program.
- Home Owners Association Transfer Fees: You do not pay this through the NACA program.
- Homeowners’ Insurance: This covers possible damages to your home. You do pay this through the NACA program
- Lender’s Policy Title Insurance: This is insurance to assure the lender that you own the home and the lender’s mortgage is a valid lien, and it protects the lender if there is a problem with the title. You do not pay this through the NACA program.
- Origination Fee: This covers the lender’s administrative costs. It’s usually about 1 percent of the total loan. You do not pay this through the NACA program.
- Pest Inspection: This fee covers the cost to inspect for termites or dry rot. This will be part of your home inspection. You do pay this through the NACA program.
- Prepaid Interest: Most lenders will ask you to prepay any interest that will accrue between closing and the date of your first mortgage payment. You do pay this through the NACA program.
- Private Mortgage Insurance (PMI): There is no PMI with any NACA backed mortgage. Otherwise you would be required to put a 20% down payment down to avoid PMI.
- Recording Fees: A fee charged by your local recording office, usually city or county, for the recording of public land records. You do not pay this through the NACA program.
- Survey Fee: This fee goes to a survey company to verify all property lines and things like shared fences on the property. You do not pay this through the NACA program.
- Title Company Title Search:: This fee is paid to the title company for doing a thorough search of the property’s records. The title company researches the deed to your new home, ensuring that no one else has a claim to the property.
- Transfer Taxes: Tax paid when the title passes from seller to buyer. You do not pay this through the NACA program.
- Underwriting Fee: The cost of researching whether or not to approve you for the loan. This goes to the lender. You do not pay this through the NACA program.
How much do closing costs typically cost?
Closing costs can typically cost between $3000-$15,000 depending on a variety of factors, including the size of the loan amount, and who will pay them. Things like home inspections, prepaying home owners insurance, hoa, and property taxes are almost always unavoidable, however many of the costs above are completely unnecessary and do nothing to favor the buyer.
How can I avoid paying closing costs?
You can avoid paying majority of the closing costs through the NACA program. The only money you will need to bring to the table at closing is your MRF(Minimum Funds Required) Which consists of prepaying property taxes, hoa, and home owners insurance, all of which go toward a good use for you. There are no FEES rolled into your loan such as a FHA loan, and you do not pay any administrative lender fees etc.
There is no “catch” in paying no closing costs through the NACA program. They do not give you a higher interest rate, and they will not roll any fees into the balance of your loan.