What are closing costs?

Melina Tomson

Purchasing a home here in Salem Oregon is a huge investment and many people save for a down payment, but forget about closing costs. Recently, the real estate document recording fee was raised from $11 to $26.  A $15 increase.  These funds would be mostly used for affordable housing projects.  With that recent news, as well as with the increased rates on Fannie Mae and Freddie Mac loans, that start April 1, 2009, it seems like a good time to take a look at typical closing costs here in Oregon.

Buyers of a home typically pay for the following lender closing costs at close of escrow:

  • Prepaid interest on the home loan
  • Loan origination fees (1-1.5% of the purchase price is common)
  • Credit report fees
  • Tax Service Fees
  • Administration Fees
  • Flood Determination Fees
  • Prepaid insurance and prepaid taxes for your escrow account with your lender.
  • Full insurance premium
  • Appraisal

The escrow fees a buyer typically pays here in Salem Oregon are:

  • Closing fees
  • Document Service Fees
  • Mailing Services
  • Wire Transfer Fees (if used)
  • Lender’s Title Insurance
  • Recording Services

So what will change about these figures with the $15 increase and increase in rates?   The cost of recording services is split between buyers and sellers in Oregon so buyers would see a $7.50 or so increase in their portion.

The bigger issue for buyers is the raise in fees by Fannie Mae and Freddie Mac.  These fees vary depending on credit scores, amount down, and what type of purchase.  Condo purchases will require a higher fee.

Oregon does not have real estate transfer taxes like many other states have so buyers and sellers don’t have to add that aspect into the negotiation of a home sale.  The amount that buyers will have to bring to the closing table is going up.  This will impact negotiations as buyers no longer will ask for $5,000 in closing costs as part of the purchase agreement, but it may be $10,000 in closing cost help.

Lenders are working hard to recoup some of their losses from bad loans.  This is one of the consequences.