Most people in the market to buy real estate in Virginia Beach, Chesapeake, or Hampton Roads generally do not have the whole scoop on what closing costs are, how much they will be, and what they are paying for.
Before you start your real estate search in Virginia Beach or elsewhere you must get preapproved and understand just what the costs are going to be.
Let’s break down just exactly what this real estate financing is going to cost you. Remember
this list may not be all inclusive:
1. Written, good faith estimate of closing costs. By law,
must be given to you within three days of application. The “Good Faith Estimate” is just that, an
estimate. Always good to estimate your out of pocket expenses on the high side.
2. Points or Loan Origination Fee: One point equals one percent of the mortgage
3. Appraisal: You are going to be asked to pay this. Since the property is collateral for the
mortgage, the lender wants to know what it is worth. Normally this is done by the appraiser
viewing the property and reviewing recent comparables. Some lenders may do a “desk top” appraisal,
meaning they do not physically view the property.
4. Credit report: Most lenders require
a credit review to see your payment history, etc. Some loans such as VA, are not credit score
driven. Don’t forget your free annual credit report. Learn how to improve your credit score.
5. Flood Zone: Are you in a flood zone? Your lender will want to determine
this and that will determine additional insurance requirements.
6. Application or document preparation fees: Most lenders have a fee associated with this.
7. Administration or Underwriting fee: Usually one or the other will be charged – cost of doing b usiness.
8. Homeowner’s Insurance: The first year’s insurance will be charged when you close.
9. Pre-paid Interest: Closing can happen on any day of the month. The earlier in the month you
close the more interest your will pay up front. Close on the 15th and
you will pay the remaining 15 days of interest at closing.
An exception to this is Navy Federal Credit Union who does not do this, but your first payment
will be more including the interest.
Veterans Administration Funding Fee: The fee charged by the VA to guarantee your
loan. Normally financed in the loan.
11. Mortgage Insurance Premium (MIP): Charged on FHA purchases. Normally added to the loan. You will also pay a monthly mortgage insurance fee if you did not put down 20%.
There is no MIP with VA.
12. Settlement Fee: These are the charges not related to the lender but cost you.
13. Title Insurance: Both Lenders and Buyers coverage. Buyer’s is optional but encouraged.
14. Notary, recording, overnight fees.
15. Termite/moisture inspection: Usually paid by seller, but be careful as you might want your own inspector. Required by lender. Termites are common in Virginia Beach,
Chesapeake, and Hampton Roads.
Home Warranty: Optional, but if your budget is tight you might consider the warranty as you only pay a deductible if something needs repair/replacement (HVAC, Water Heater, etc)
Home or condo fees: There may be a special assessment pending,
but this should be paid by seller.
Home Inspection: You need to have a home inspection. This cost will normally be paid in
While this list is not totally inclusive it will provide you a good estimate before you start your Virginia Beach, Chesapeake, or Hampton Roads real estate search. You may very well decide you need assistance from the
seller for closing costs vice a straight reduction in sales price.
600 Lynnhaven Pkwy #206 Virginia Beach, VA, 23452 USA
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