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US Mortgage Closing Cost Fees

US Mortgage Closing Cost Fees

The closing cost with a mortgage in Florida will include the following:

The Lender’s Loan Origination Fee: This fee covers the expenses in setting-up and processing the home loan for the Canadian buying US real estate. The loan origination fee may be a percentage of the mortgage amount or can be an outlined fee. You need to inquire about this fee to fully understand the total cost.
Discount Points: This option is available to the home buyer to pay “points” to lower the ultimate interest rate at which the US mortgage loan will be paid back.  Each point equals 1.00 percent of the mortgage amount. For example: on a $100,000 loan, 1.00 point would equal $1,000. You need to compare the interest rate offered to you with 1 point versus an interest rate without any points and check if there is a major difference in the monthly payment before you pay the points.  Speak to your mortgage lender directly about this.

Appraisal Fee:  The US home will need to be appraised and inspected and this appraisal fee covers this work.  This cost can be included in the closing cost or it can be a separate payment that is required at the time of the loan application.
Tip: You may want to ask the seller to consider chipping in to pay for the appraisal fee.

Credit Report Fee: The mortgage lender will utilize a credit report to determine your creditworthiness.  This is usually a fee that is charged upfront because it is needed at the beginning stages of the US mortgage process.  As a Canadian, you may need to provide them an equifax report as you will likely not have a US credit history, which they are accustomed too.

Odd Days of Interest Payment: The buyer is responsible to pay for the interest on the mortgage loan to cover the time from the closing date to the end of the month.  If you obtain the property on the 15th of the month, you need to cover the interest cost of the mortgage from the 15th until the end of the month.

Escrow Account: To pay for all your real estate taxes and insurance, an escrow account will need to be setup for this payment at a future point in time.  The state of Florida laws require the actual amount collected be enough to pay the full annual amount on the actual due date, plus two months as a “safety cushion”. These amounts are not charged interest nor do they earn interest.  Any over payment can be returned to you.

Recording Cost.  This fee is charged by the local counties to ensure the US mortgage is registered in government administrative records.

Summary of Closing Costs

  • Your Attorney’s Fee
  • Loan Origination Fee
  • Fee for Title Insurance
  • Appraisal Fee for Mortgage
  • Credit Report Fee
  • Mortgage Underwriting Fee
  • Discount Points Fee
  • Escrow Fees
  • Insurance Fee
  • Inspection Fee
  • Mortgage Insurance Premium
  • Homeowner’s Insurance to be paid for one year
  • Interim Interest from ownership until the end of the month

US Mortgages Require Homeowners Insurance
US mortgage lenders will require you to obtain homeowner’s insurance, which protects the mortgage lender and you, the buyer, from loss in the event the home is destroyed or damaged.  The good thing about homeowners insurance is that it depends on the real estate home and not on if you are a resident or a Canadian buying US real estate.  The insurance rate is based on several factors such as a the location of the real estate property, age of property, construction details, and several other factors.
Each state has its own requirements when it comes to buying homeowners insurance.  As you would expect, earthquake coverage is managed differently in states like California compared to New York and Florida.  Since Florida is prone to hurricanes, each Florida homeowner or real estate buyer needs to be aware of the coverage options that they are paying for when buying homeowners insurance.  According to the Florida Statutes, insurers need to give “reasonable discounts” for “mitigation or measures” to protect your home against hurricanes.