Mortgage Closing Cost – Omaha NE Home Buyer’s Guide

January 6, 2020
Michael Petrovich
Home loans in Omaha NE, Mortgage Education

What are the closing cost for a home loan in Omaha Nebraska?

After the mortgage rate, closing cost are the primary concern for many home buyers. There are several professionals involved in the real estate and mortgage transaction. Most of them will have some fee listed in the mortgage cost.

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Lender fees
Third party fees
Realtor fees
Seller credits to cover fees
How to lower your mortgage fees

Lender fees

There are lender fees or fees associated with the lender and there are fees that are third party fees. Now some of the lender fees are paid to third parties. We include these in the lender fees because the lender orders them and knows the exact amount that will be charged.

Fees directly to the lender

There are two basic fees that are directly from the lender. These are the underwriting fee and processing fee. Some lenders will “blend” this fee into one large underwriting fee and others will split it out into more than two different fees (IE underwriting fee, processing fee, application fee). That is where it can get a bit confusing. It is important to ask your lender what fees are cost for the loan and which ones are the third party fees, or have another lender review the mortgage cost sheet for a second opinion.

Processing fee

A mortgage is a labor intensive process with a lot of people involved in getting your loan from start to close. A processor is the “middleman” between the loan officer and underwriter. Every mortgage company will structure their loan process a bit different, but generally the processor reviews and structures the file for underwriting.

After the loan officer receives a contract, they will hand the processor the contract and all income and asset documentation. The processor reviews the documents to see if anything is missing or needs to be updated before handing the file to the underwriter.

A processing fee can be between $200 and $500 and is used to cover the expense of the processor.

Underwriting fee

Once the file is reviewed by the processor it is given to underwriting. The underwriter is the authority that officially approves or denies the loan. They will review the income and asset documents, approve the loan, and send it back to the processor to collect any items that remain.

The underwriting fee is between $695 and $995 and is used to cover the cost of the underwriter.

Lender requested third party fees

In addition to the fees paid directly to the lender there are a few fees that will go to third parties but are ordered directly by the lender. Again, in this area there could be different names for fees and different ways lender structure these. They are the appraisal, flood certification, tax service fee, verification of employment, MERS, and credit report.

Appraisal fee

This is the largest and most important lender requested third party fee. The appraisal can cost between $475 and $600 depending on lender and the loan program. There can also be additional rush fees (if we need it quickly), drive time fees (if an appraiser has to drive a long distance to the property), complex fees (if the house is unique and will require more work by the appraiser), and repair fees (if there are needed repairs the appraiser will have to go back to the house when they are done).

Flood certification

All lenders must verify that the home is not in a flood zone. A small fee ($10 to $20) is charged to order a certification from FEMA.

Tax service fee

If your loan has an escrow account, a service company will handle the processing and paying of your taxes and insurance. For this they charge a one time fee at close. It is usually $75 to $150.

Verification of employment

Most lenders will order a verification of employment. Most lenders will just roll this cost into the processing fee. However, some will separate it out with a small verification fee. Usually $30 to $45.

MERS

The MERS (Mortgage Electronic Registration System) keeps track of who owns loans in the US. Because loans are often sold to other investors, the MERS keeps track of who holds the mortgage. Mortgage should appear on your credit, but the MERS will officially keep track of all US mortgages. If you have a mortgage that is not appearing on your credit, the MERS should pick it up. The fee is usually $10 to $20.

Credit report

A full hard inquiry of all three credit bureaus is required on a mortgage. The fee for a credit report is $22 to $50 and will be charged at close. Typically you are not charged for this if you do not close on a loan. If a bank pulled your credit and you do not use them for financing they cannot charge you for the credit report.

Third party fees

There are other people besides the lender working to close your loan. A title company, a termite inspector, home inspector, government agencies, and realtor are all working to get you to the closing table. Each one of them will have a fee that appears on your mortgage cost sheet.

Because these are third party fees that are not ordered by the lender, a lender will have to estimate many of these fees initially.

Title company

This is going to be the largest third party expense. A title company is needed to transfer the money and the ownership of the house from the seller to the buyer. They will handle all the money and signing of all legal documents. Generally the realtor will pick the title company though a buyer can shop for their own title company at least on the loan portion.

Title closing fees

Title is going to charge a closing fee for the real estate transfer and for the loan. These are usually done at the same time but are actually two separate transactions. The title company will first close on the loan and then close on the real estate transfer. The fee is between $200 and $350 for each.

Title insurance

Title’s job is to research the county records of the property for any existing liens or legal issues associated with the property. If the seller has a child support, tax, or contractor lien on the property it is title’s job to find it and make sure it is cleared at or before close.

Title insurance is your coverage if anything is missed. If the seller owes a contractor some money for a remodel and title did not catch it the title insurance has you covered. A legal dispute with the neighbor over a fence or tree is also covered if title did not catch it before close. Title insurance is set by the state and is not negotiable.

Endorsement fees

These are additional insurance coverage for miscellaneous possible issues. Coverage if there are issues with property access. There is coverage for mineral rights and environmental liens. These fees are usually $25 and a Nebraska property has no more than 3 or 4 endorsements.

Termite inspection

A termite inspection is required on some loans and option on others. Exactly like it says, it is an inspection for wood destroying insects. The fee in Nebraska is around $90.

Government fees

After any real estate transfer a new deed and mortgage note must be filed with the county. There is a fee for these filings and in Nebraska it varies between $75 and $200. It is based on the county and the length of the note and deed filed.

Home inspection

A home inspection is option and is usually not included on the mortgage cost sheet. If a buyer elects to get a home inspection they will usually pay the home inspector at the time of inspection. The buyer can also negotiate with the seller to have them cover all or part of the inspection. A home inspection is between $400 and $1000.

Realtor transaction fee

Commissions to the listing agent and the buyers agent are paid by the seller. A buyer will not have to pay their agent’s commission unless that is specifically listed in the contract. However, in Nebraska most buyer’s agents will charge a one time administrative fee to cover office expenses. This fee is set by the agent and can be $300 to $1000.

Seller credits to cover fees

All loan programs allow the seller to give credits to the buyer for all or part of the fees. The amount they are allowed to give is between 3% and 9% of the purchase price and varies by loan program and down payment. The seller can only cover cost and escrow. They cannot cover any of the down payment. For buyers with limited funds, they can negotiate with the seller to help with the cost of buying the home. The lender and the realtors will work together to structure a home purchase in a way that is beneficial to the buyer and the seller.

How to lower your mortgage fees

The most obvious way to lower your mortgage fees is to ask the seller to cover them for you. But there are a few other ways to lower the fees.

Lender credits

Many buyers ask about “no cost home loans”. The truth is there is no such thing as a mortgage with no cost. However, a lender can provide credits in exchange for a higher interest rate. This will depend on the current market, but the buyer has the option to take a higher rate and have the lender pay some or all of the cost for them. A buyer’s consultation with your lender will allow you to explore the best way to structure your loan.

Appraisal waivers

The purpose of an appraisal is to determine if the price you are paying for the house is reasonable. If the lender ever had to sell the home to recoup the mortgage, they want to make sure they have a reasonable shot at doing that.

We are starting to see technology take over this valuation role. An automated valuation is now run on all new home purchases and more lenders are electing to use this instead of an appraisal. If a buyer is a good credit risk and has a decent down payment, it is possible to get an “appraisal waiver” and avoid that large fee.

What to do now?

Closing cost vary between lenders and between loan programs. The exact cost you will pay for a new home can only accurately be determined by speaking with a local mortgage expert. We are hear to answer all of your questions and can get you a more accurate quote even before you complete an application.

What To Do Next

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