On The Money

FHA Home Loans: Understanding the Average Closing Costs

Home Loans in Baltimore Similar to most home loans, FHA mortgages come with various closing costs. These could differ drastically by geographic location, lender, down payment, and market conditions. In general, however, you have to budget for the following closing costs:

Private Mortgage Insurance

FHA mortgages require a premium upfront, which is 1.75% if the loan amount. Factor in the ongoing mortgage payments if your loan to value (LTV) ratio is around 78%.

Prepaid Property Taxes

In most cases, you might be required to pre-pay the taxes you’ll accumulate between the closing time and the following tax due date.

Home Inspection

This covers the primary home structure and outbuildings. While this isn’t usually required, it’s strongly advised if you’re buying an older property.

Property Survey

Surveys could differ in thoroughness and scope, but includes a mortgage, location, and boundary survey.

Home Appraisal

This will be commissioned by your lender and will be used for determining if the purchase price of the property is worth it. Mortgage brokers and other experts in Baltimore say that this is important to reduce the risk of the lender in case you default on your FHA loan.

Title Search

This is for verifying the title chain of the property and ownership since it was built to make sure that the seller has the legal right to sell you the property.

Title Insurance

This covers expenses for fixing issues like covenants or latent liens, if any, and offers ongoing protection from property claims.

Record and Transfer

Each sale must be recorded with the proper jurisdiction, where the property’s located, specifically the county or city.

Environmental Evaluations and Flood Determinations

In particular areas, environmental evaluations like fire hazard screenings are necessary. Moreover, a flood determination might be required to check if you should get flood insurance coverage.

Origination Fee

This is a catchall to miscellaneous fees at closing, including attorney’s fees, document fees, escrow charges, and courier fees among others.
If you’re not entirely sure what costs you should prepare for at closing, it’s best to ask your lender. Ask them about every itemized charge and why it’s included.