Purchasing a Louisiana Home: What You Need to Know About Closing Costs

Wednesday, March 11, 2020
   
home closing costs blog photo of white brick traditional home

Purchasing a home, whether in Louisiana or out of state, is a life event. It’s definitely exciting, but the process can be stressful as you navigate the offer and counteroffers, home inspections, repair negotiations, mortgage applications, appraisals and deadlines. Looming at the end are the home closing costs. 

The grand total often begins as a ballpark figure ranging in the thousands of dollars and represents anywhere from two to five percent of the purchase price. The actual closing costs tally a laundry list of expenses necessary for the purchase of a home that are in addition to the actual cost of the home or mortgage.

The Components of Home Closing Costs

A number of processes must take place in order for you to become a homeowner, and each of those steps comes with a price tag. Some actions are more costly than others, but each should appear as a line item on the closing cost sheet. Within three days of applying for your mortgage, you should receive a document called a loan estimate form—formerly known as a good faith estimate—itemizing each of the fees and charges to be paid to close. 

You’ll see the revised, final version again at the actual closing. Together, the costs make up the final closing cost total figure owed to other parties for purchasing a home.

  • Loan Origination Fee: Also known as the underwriting fee, it’s the amount your lender charges to research and verify the information on your loan application and process your mortgage.
  • Discount Points: You can buy points to lower the interest rate on your loan.
  • Mortgage Insurance: If you have less than 20 percent of the purchase price to put down in equity, you will have to pay for private mortgage insurance to cover your loan against default.
  • Prepaid Interest: Lenders collect in advance the interest that would accrue between the issuance of the mortgage loan and your first loan payment.
  • Title Search and Insurance: A title company will do a search and certify that the property has clear title free of liens or disputes.
  • Surveys: A survey company may check property lines and any potential infringements.
  • Deed Recording Fees: Your local government offices charge a fee to record the sale and transfer of property.
  • Credit Report Charges: While relatively small, the charge for your lender’s credit check will appear on the closing sheet.
  • Transfer Tax: Transferring title to the property from one person to another carries a tax, usually a percentage of the purchase price.
  • Property Taxes: Usually two months’ worth is collected in advance and placed in escrow.
  • Homeowner’s Insurance: Most lenders require homeowner’s insurance and collect the year’s premium in advance to be held in escrow.
  • Homeowner’s Association Fees: If the property is associated with a yearly HOA or condo fee, that fee will be collected in advance at closing.
  • Attorney’s Fee: Certain documents must be prepared or reviewed by an attorney, and that fee will also appear on your sheet.

Some fees may be out-of-pocket prior to closing, like the home and termite inspections, for example. Some transactions may have more itemized closing costs than others. Sellers may also have closing costs, which typically include the real estate agent’s commission, any agreed-upon closing cost assistance or allowances conceded to the buyer and legal recording fees, for example.

Purchasing a Home in Louisiana

Home closing costs can easily total $3,500, $6,500 or more depending on the cost of your property, your mortgage lender, the title company overseeing the process and the costs you’re able to negotiate.

One of the primary benefits of using a credit union like La Cap is that you’re treated not as a customer — but as a member. We thrive only when you do. If you’re thinking about buying a home in Louisiana, you can use our online mortgage calculator to see what your monthly note would be. Or, you can always stop by or call to speak with one of our experienced mortgage specialists. With La Capitol Federal Credit Union, you’ll be one step closer to getting the home you’ve always wanted.