The unknown and somewhat variable nature of mortgage closing costs and title insurance cost can make home buyers uneasy and stressed out. This, in turn, can make the job of a real estate, title, or loan agent much more difficult, as the agent will need to take additional time during the closing of the loan to explain to the buyer any costs that the buyer does not understand or did not anticipate. With the use of an effective closing cost and title calculator, an accurate estimate can be provided to the buyer well in advance of the closing date. Once generated by hunchbacked clerks using a quill pen, a ledger, and some serious math skills, closing cost estimates can now be generated in seconds with the right tools and up-to-date technology.
Several weeks prior to the actual closing date on a mortgage loan, agents will of course provide a buyer with a Good Faith Estimate of what the closing costs will be. However, not all estimates are as good or as accurate as others. Some are still tallied by hand, and include rough estimates that vary anywhere from 2 percent to 5 percent of the loan. That means the buyer can be told that closing costs might be anywhere from $10,000 to $25,000 on a $500,000 loan. Other closing and title insurance cost estimates are generated with low quality calculators or spreadsheets that don’t include all fees and costs. These, too, cause client-agent frustration and additional stress and time on the part of both agent and buyer.
When using or installing a closing cost or title calculator, it’s helpful to review all fees associated with closing on a mortgage in your market area to ensure that your closing cost calculator includes all of the possible fees. There are two basic types of fees associated with getting a mortgage: one-time fees, and reoccurring fees.
One-time fees associated with closing on a loan mortgage are paid at the time of closing, and won’t need to be paid again. Getting a survey or home appraisal, having a credit report run, and various underwriting and notary fees are examples of one-time fees. Title insurance cost is included with the one-time fees. Title insurance protects you (or your buyer) in the event that someone (such as an heir or co-owner of the property) disputes the right of the seller to sell the property, at any time during the period of the loan.
One-time fees could include any of the following. Note that not all loans will require all of these items.
Reoccurring fees associated with closing on a mortgage are fees that are paid once upon loan origination or closure, and then regularly need to be paid out on an ongoing basis. The buyer will pay these fees monthly, yearly, or quarterly, depending on how the escrow is set up, or upon the buyers’ personal requests.
Reoccurring fees may include any or all of the following.
Needless to say, calculating all of the individual fees associated with closing costs by hand can be a nightmare. Many of the fees are variable based on the type of loan, the loan amount, the interest rate, the property location, the vendor or bank used, etc. Historically, this was done with pen and ink, by a lowly clerk in the recording office or legal office, who sat on a tall stool in front of a leather-bound ledger and used a quill pen and some serious math skills to calculate legal and recording fees associated with buying and selling property.
In an effort to increase accuracy and decrease human error, people have been evolving this process for hundreds of years, with computers making the biggest changes to this process. While each number and fee had to be individually calculated, entered, and added up by hand in the past, computers made it possible to perform all of these tasks rapidly, even tallying them up and eliminating some of the human error. However, this process still took time and required persistence, a high tolerance for boredom, and several hours in front of a spreadsheet to generate a solid estimate.
Now, thanks to powerful apps and software solutions that can be embedded on websites, it’s possible to do all this in a few seconds. With cutting-edge closing cost or title calculator software, you simply type in the loan amount, select a few answers from drop down menus, click enter, and get a precise estimate of title insurance cost and other closing fees in seconds. This real-time estimate takes into consideration fee changes and other variables that threw borrowers for a loop in the past.
Although the technology is out there to generate a Good Faith Estimate efficiently and accurately, you might be surprised to learn that not everyone is using it. If an agent is old school, they might be relying on memory, rough estimates, free online calculators, or Microsoft Excel to come up and tally the numbers in a Good Faith Estimate. This can be highly inaccurate and lead to confusion and frustration along the line. For example, say your agent remembers that last time they closed with X title company, the fees were $250 for underwriting, plus a $100 title transfer fee, and $125 in notary fees. So they tell you it’ll be $475 for title fees. You both feel shocked when X title company charges an extra $150 because their rates have increased or the agent forgot the recording fee. This inaccuracy could have been avoided if they’d used up-to-date title calculator software to tally the complete costs of closing on a loan.
Closing cost calculator widgets can be installed on a website to effortlessly generate up-to-date closing and title cost estimates. TitleCapture offers customized closing cost calculator software and apps that deliver accurate results within two seconds. TitleCapture is trusted by over 1,000 title companies and real estate companies nationwide. To learn more, contact us today.