Closing Costs in Mississippi

Introduction

Are you planning to purchase a home in Mississippi? As you embark on this exciting journey, it’s crucial to understand the financial aspects involved, including closing costs. Closing costs can sometimes catch buyers off guard, but fear not! In this blog post, we will:

1. Define closing costs
2. Provide common elements included in closing costs, and
3. Provide estimated ranges of closing costs in Mississippi.

What are Closing Costs?

Before we dive into closing costs in Mississippi, we need to first understand what closing costs are.

Closing costs refer to the fees and expenses that are incurred during the process of purchasing or refinancing a home. These costs are typically paid at the closing or settlement of the real estate transaction. Closing costs:

• Are separate from the purchase price of the property.
• In addition to the down payment made by the buyer.
• Cover various services and expenses associated with the home-buying process.
• Typically divided between the buyer and the seller. In some cases, the seller pays the full closing costs.

In the next section, we’ll cover the various costs that can make up closing costs in Mississippi.

Elements of Closing Costs in Mississippi

Below is a list of common elements included in closing costs in Mississippi.

1. Lender Fees
2. Title-Related Fees
3. Third-Party Fees
4. Prepaid Expenses
5. Government Fees

Lender Fees Included in Closing Costs

Lender fees are charges imposed by the mortgage lender for originating and processing the loan. These fees can vary but often include:

• Origination Fees: This is also known as a loan origination fee. These are fees charged by the lender to cover the administrative costs of processing the loan application.
• Discount Points: Points are prepaid interest that buyers can pay to lower their mortgage interest rate. Each point is typically equal to 1% of the loan amount.
• Mortgage Application Fees: Some lenders may charge an application fee to cover the costs associated with processing the loan application.
• Underwriting Fees: These fees cover the cost of evaluating the borrower’s creditworthiness and verifying the loan’s documentation.
• Document Preparation Fees: Lenders may charge fees for preparing the necessary loan documents.
• Mortgage Broker Fee: If you used a mortgage broker to find a lender, they may charge a fee for their services.
• Mortgage Insurance Fee: This fee is typically required when a borrower puts down less than 20% down payment on a conventional loan. It protects the lender in case the borrower defaults on the loan.

Title-Related Fees Included in Closing Costs

Title-related fees are associated with ensuring the property’s title is clear and transferring ownership from the seller to the buyer. These fees can include:

• Title Search Fees: This fee covers the cost of searching public records to verify the property’s ownership history and check for any liens or encumbrances.
• Title Insurance Premiums: Title insurance protects the lender and buyer against any potential title defects or legal issues that may arise after the purchase. Buyers typically pay for both lender’s and owner’s title insurance policies.
• Title Examination Fees: This fee is charged by the title company or attorney for reviewing the title documents.

Third-Party Fees Included in Closing Costs

• Appraisal Fee: Lenders often require an appraisal to determine the property’s market value and ensure it meets lending standards.
• Home Inspection Fee: A home inspection assesses the condition of the property and identifies any potential issues.
• Survey Fee: A survey determines the property’s boundaries and identifies any encroachments or easements.
• Escrow Fee: This fee is paid to the escrow company or attorney who handles the closing process and ensures all funds are distributed correctly.
• Attorney Fees: Fees paid to attorneys involved in the closing process to review documents and provide legal advice.
  • Please note that in Mississippi, it is not required by law to use an attorney in real estate transactions. However, some home buyers or sellers choose to involve an attorney in their real estate transactions. Attorneys can provide valuable insights, review contracts, and ensure that all legal aspects of the transaction are addressed.

Prepaid Expenses Included in Closing Costs

Prepaid expenses include costs that buyers pay in advance to ensure the property’s financial obligations are up to date. These expenses can include:

• Property Insurance Premiums: Lenders often require buyers to obtain homeowner’s insurance before closing. Buyers may need to prepay a portion of the insurance premium.
• Property Taxes: Depending on the closing date and the timing of property tax payments, buyers may need to prepay a portion of the annual property taxes at closing.
• Prepaid Interest: Buyers typically pay the interest that accrues on the loan between the closing date and the end of the month.

Government Fees Included in Closing Costs

Various government fees are associated with the transfer of ownership and the recording of documents. These fees can include:

• Recording Fees: These fees cover the cost of recording the deed and other related documents with the county or local government office. These fees vary by county and are charged to the local recording office.

There is no property transfer tax in Mississippi.

Factors That Influence Closing Costs in Mississippi

Putting the elements of closing costs in Mississippi aside, there are other factors that influence the answer to the question: how much is the closing cost on a house in Mississippi? Your total closing costs in Mississippi will vary based on these factors:

1. Property Type:
2. Loan Type
3. Down Payment Amount
4. Interest Rate
5. Loan Terms

How Much are Closing Costs in MS?

Here is the truth: What a buyer can expect their closing cost in Mississippi to come in at depends on a variety of factors. Actual closing costs in Mississippi will depend on which of the elements specified in the previous section are included in the closing cost.

Average Closing Costs in Mississippi

The average closing cost in Mississippi depends. However, for a $200,000 house, the average closing cost can range from $3,500 to $7,000 or more.

Estimated Ranges of Closing Costs in MS?

Armed with the knowledge in the previous sections, we’re now ready to answer the question of “How much are closing costs in Mississippi?” While exact figures of closing costs in Mississippi can vary, here are some estimated closing costs in Mississippi. You can plug these figures into closing costs calculator online to arrive at your estimated total closing costs.

Please note that these figured are meant to be directional, not exact.

Estimated Lender Fees Included in Closing Costs in Mississippi

• Origination Fees: Typically range from 0.5% to 1% of the loan amount. For a $200,000 loan, this translates to $1,000 to $2,000.
• Discount Points: Each point is 1% of the loan amount. For example, if the loan amount is $200,000, one point would be $2,000.
• Mortgage Application Fees: Can range from $200 to $500.
• Underwriting Fees: Typically range from $500 to $1,000.
• Document Preparation Fees: Typically range from $100 to $500.
• Mortgage Broker Fee: Can range from 0.5% to 2.75% of the loan principal. Please note that some mortgage brokers charge hourly rates or a flat fee instead of using the loan principal to calculate their broker commission.
• Mortgage Insurance Fee: Can range from 0.3% to 1.5% of the loan amount per year

Estimated Title-Related Fees Included in Closing Costs in Mississippi

• Title Search Fees: Can range from $200 to $500.
• Title Insurance Premiums: Vary based on the property’s value, but estimated costs can range from $1,000 to $2,000 or more.
• Title Examination Fees: Typically range from $300 to $800.

Estimated Third-Party Fees Included in Closing Costs in Mississippi

• Appraisal Fees: Typically range from $300 to $500.
• Home Inspection Fees: Can range from $300 to $500 or more.
• Survey Fees: Costs can vary based on the property size and complexity but can range from $300 to $800 or more.
• Escrow Fee: Can be a flat fee in the range from $500 to $2,000 or about 1% of the home sale price.
• Attorney Fees: May range from $500 to $1,500, depending on the complexity of the transaction.

Estimated Prepaid Expenses Included in Closing Costs in Mississippi

• Property Insurance Premiums: Costs vary depending on the insurer and property value, but estimated prepaid insurance expenses can range from $500 to $1,500 or more.
• Property Taxes: Vary based on the property’s assessed value and local tax rates. For estimation purposes, an annual property tax amount of 1% of the property value can be considered. If the property value is $200,000, the prepaid property tax could be approximately $2,000.
• Prepaid Interest: The amount of prepaid interest expense varies. It depends on the loan amount, interest rate, and the number of days between the closing date and the first mortgage payment. It is calculated by multiplying the daily interest rate by the loan amount and the number of days between the closing date and the first mortgage payment.
  • For example, if you close on a $200,000 loan with an interest rate of 4% on June 15th and your first mortgage payment is due on August 1st, your prepaid interest expense would be calculated as follows:
    • Daily interest rate: 4% / 365 = 0.01096%
    • Number of days between closing date and first mortgage payment: 16
    • Prepaid interest expense: 0.01096% * $200,000 * 16 = $351.36

Estimated Government Fees Included in Closing Costs in Mississippi

• Recording Fees: Recording fees vary by county and can range from $25 to $26 for the first 5 pages of a document and $1 for each additional page.

Conclusion

Navigating the world of closing costs in Mississippi can seem daunting, but armed with the knowledge we’ve provided, you’ll be better prepared to understand and anticipate these expenses. Remember that closing costs are separate from the purchase price and cover various services and fees associated with the home-buying process. They can be influenced by factors such as property type, loan type, down payment amount, interest rate, and loan terms.

While exact figures may vary, we’ve outlined estimated ranges for each element of closing costs in Mississippi. Remember that these figures are just a general guide. Actual costs may vary depending on individual situations and particular transactions.

Whether you’re a buyer or seller in Mississippi, understanding the components of closing costs empowers you to make informed decisions and plan your finances accordingly. Remember to consult with professionals, such as your real estate agent, lenders, title companies, and attorneys, to get a more accurate estimate of your specific closing costs.

By being well-informed and prepared, you can navigate the closing process with confidence and ensure a smoother real estate transaction in the beautiful state of Mississippi.

Sincerely,

Your Mortgage Minister