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What Is The Difference Between A Recurring and Non-Recurring Closing Cost

Basics

Some of the closing costs you pay are just the beginning of costs that you will pay as long as you own the property.

These costs can include property taxes and hazard insurance policies. Year in and out you will need to pay property taxes and maintain a hazard insurance policy. These costs usually cannot be avoided.

Non-Recurring Costs

These costs are one time charges you will not need to pay again with this loan. Of course if you refinance again or buy another property you will have to pay these charges again. You just don’t need to pay them otherwise.

Non-recurring costs may include:

  • escrow fees
  • title insurance policy
  • notary fee
  • government filing fees
  • courier fees
  • lender fees
  • wiring fees

These types of fees are usually one time charges. You don’t need to worry about paying them again and again. They can still add up to several thousand dollars.

You can compare offers from different lenders by applying for a loan and receiving a “Good Faith Estimate” from each of them.

A good faith estimate is a written estimate of the closing costs of a loan. This may include recurring and non-recurring costs. This is only an estimate and not a guarantee of fees. Many of the fees are third party fees that can only be estimated because the lender or mortgage broker doesn’t control the third parties.

When you receive these good faith estimates from different parties compare the recurring and non-recurring costs properly. If one good faith estimate appears too low it is probably because the estimate is lowballed by not including all of the real charges. This is a temptation when brokers or lenders are competing for your business. They know many borrowers will just go with the lowest estimate, not realizing that the actual costs will be different.


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