Pentagon Federal Credit Union
Login Accounts
Search
  • Routing # 256078446
  • Partners
  • Member Discounts
  • Wealth
  • Foundation
  • Branches & ATMs
  • About
  • Search
  • Checking & Savings
    • Checking
      • Free Checking
      • Access America Checking
      • All Checking Accounts
    • Savings
      • Premium Online Savings
      • Regular Savings
      • Money Market Savings
      • All Savings Accounts
    • Certificates
      • Money Market Certificate
      • Coverdell Education Certificate
      • All Certificates
    • IRAs
      • IRA Certificate
      • IRA Premier
      • IRA Savings Account
      • All IRAs
    • How Can We Help?
      • Contact Us
      • FAQs
      • Forms
      • Advice Center
    • Special
      • Great rates for everyone with our savings options
  • Credit Cards
    • Our Cards
      • Credit Cards Overview
    • How Can We Help?
      • Contact Us
      • FAQs
      • Disclosures
      • Resource Center
    • Special
      • Choose the perfect card - Learn More
  • Auto
    • Auto Loans
      • Purchase
      • Refinance
      • Car Buying Service
    • Protection
      • Vehicle Protection
      • GAP Insurance
      • Debt Protection
    • How Can We Help?
      • Contact Us
      • FAQs
      • Forms
      • Advice Center
    • Special
      • Find your next car - through PenFed Car Buying Service
  • Mortgage & Home Equity
    • Purchase
      • Buy a Home
      • VA Loan
      • FHA
      • Conventional Fixed
      • Jumbo Loan
      • Power Buyer
    • Refinance
      • Refinance your Home
      • VA Streamline
    • Home Equity
      • HELOC
    • Real Estate Services
      • Find An Agent
    • Tools & Resources
      • Knowledge Center
      • eBooks
      • New Homebuyer
      • Calculators
      • PenFed Title, LLC
      • Contact
    • Special
      • Increase your wins , Become power buyer certified
  • Loans
    • Personal Loans
      • Personal Loans
    • Student Loans
      • Student Loan Refinancing
      • In-School Student Loans
    • How Can We Help?
      • Contact Us
      • FAQs
      • Forms
      • Advice Center
    • Special
      • Personal Loans made easy online
  • Learn
    • Learning Hub
      • Learning Center
      • Mortgage Knowledge Center
      • Advice Center
      • Financial Hardship Center
      • Emergency Furlough Relief Assistance
      • Natural Disaster Relief Assistance
    • About PenFed
      • About
      • FAQs
      • Forms
    • Security & Fraud
      • Security Center
    • How Can We Help?
      • Press Room
      • Careers
      • Contact Us
    • Special
      • Exclusive Member Offer - Spectrum mobile
  • Join Now
  • Log In
  • Accounts
  • Resources

Affinity Title

MORTGAGE KNOWLEDGE CENTER

PenFed Mortgage with Confidence

Home Buying Steps

  • Getting Started
  • Finding a Home
  • Getting a Mortgage
  • Home Ownership

Mortgage Topics

  • VA Loans
  • Conventional Loans
  • First Time Homebuyer
  • Home Equity
  • Homebuying 101
  • Checklists
  • Adjustable Rate Mortgages
  • PenFed Top 10
  • Refinance
  • Jumbo Loans
  • FHA
  • Videos

Mortgage Products

  • Mortgage Center
  • Refinancing
  • Home Equity
image

CONVENTIONAL LOANS

Rates starting at % (APR %)¹

 

Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

  1. Home
  2. Mortgage Knowledge Center
  3. What Homebuyers Need to Know About Closing Costs

MORTGAGE

What Homebuyers Need to Know About Closing Costs

What you'll learn: Average percentage for closing costs, typical fees, and ways you can save money

EXPECTED READ TIME: 3 MINUTES

September 19, 2023

It’s easy to zero in on interest rates when shopping for a mortgage. While rate does affect your home buying budget, there’s another important item to consider: closing costs. These are the fees and costs of getting a mortgage that are typically due at loan closing. Read on to learn how to estimate closing costs, what is included in a buyer’s closing costs, and ways to potentially save on closing costs.

How much are closing costs?

The typical mortgage closing costs are between two percent and five percent of a loan’s purchase price. Here are some sample numbers:

Mortgage Amount Typical Closing Costs
$350,000 $7,000 – $17,500
$500,000 $10,000 – $25,000
$750,000 $15,000 – $37,500

Why such a wide range? Closing costs vary depending on various factors including the type of loan, your lender, and the services performed to process your mortgage. It may sound like a large dollar amount needed at the time of closing, but you may be able to reduce your upfront or overall costs.

  • Tip: Use a closing cost calculator to estimate your charges.

What is included in closing costs?

First, let’s examine what’s included in the typical closing costs for a mortgage. Closing costs are generally lumped into three categories: origination fees, title fees, and prepaid costs.

Origination fees

Each lender may handle their fees or costs differently. Some bundle everything into one origination fee (sometimes called origination or lender points), and others break fees out individually. In many cases, lenders simply pass on costs they incur throughout the process.

The typical mortgage origination fees include:

  • Home appraisal fee
  • Courier fees
  • Credit check fee
  • Flood certificate fees
  • Underwriting fees
  • Processing and administrative fees

Title fees

Most closings also include title fees, which grant you the home deed and official ownership. These fees typically cover the cost of title search, insurance, and settlement. You may also choose to maintain title insurance after buying a home to protect your investment.

Prepaid home costs

Prepaid costs may include insurance premiums, property taxes, homeowners association (HOA) fees, and more. They are often held in a third-party escrow account and paid as they come due.

You might prepay one full year of homeowners insurance and keep an extra two months in reserve. You may also need to pay the rest of the year’s HOA fees or other fees and taxes. Your loan estimate will further outline all of these fees.

Mortgage discount points

An optional fourth category is the cost of discount points. If you decide to buy down your mortgage rate with discount points, the cost may be due up front at closing. This can be a good tactic to reduce your overall loan cost if you have the cash available. One mortgage point is equal to one percent of the total home loan.

Who pays closing costs?

Buyers are typically responsible for mortgage closing costs. However, sometimes motivated sellers will cover some of the loan costs. And some mortgage types, like Federal Housing Administration (FHA) loans, allow the seller or another third party to pay up to a certain percentage toward a buyer’s closing costs.

How can you save on closing costs?

It’s unlikely to avoid paying closing costs completely, but there are creative ways to reduce the amount needed up front.

  • Negotiate – As mentioned, it’s sometimes possible to negotiate with a seller to pick up some of a buyer’s costs. The savings may be offset by a higher purchase price or rolling the costs into the loan amount.
  • Consider loan type – There are some mortgage types — like FHA and VA loans — which generally have fewer closing costs and ultimately may require less money at closing.
  • Compare lenders – Credit union closing costs tend to be lower than other mortgage providers. This is one of the many advantages of a credit union mortgage.

Can you roll closing costs into a mortgage?

Depending on your lender’s rules and loan type, some closing costs may be rolled into a loan. While this means you’ll pay less up front, it also means you’ll increase your loan balance – ultimately paying more in interest over the life of the loan.

When do I know my closing costs?

You’ll receive a closing disclosure at least three days before you are scheduled to close on your loan. It will include a final overview of your loan type, annual percentage rate (APR), closing costs, and the actual cash needed to close. This is your chance to review the final details and, if applicable, wire your funds for closing.

 

For more information about PenFed Mortgages:

PenFed Mortgage: 

800-970-7766

Get Started

SIMILAR ARTICLES

VA Loan Closing Costs – Everything You Need to Know

Do VA loans have closing costs? Who pays VA closing costs? Can you roll closing costs into a VA loan? Discover the answers to these and more common questions.

Couple discussing buying a home

Creating Your Home Buying Budget

If you're buying a home, it's essential to know what all of the costs are so you can plan ahead. Find out about the different fees for inspections, closing costs, down payment, and more.

Person signing documents

No Closing Cost Refinance vs Refinance with Costs

A zero cost refinance may sound like the obvious choice, but are there reasons to choose closing costs? Let's take a look.

military personnel being handed keys to new home

How to Wire Funds for Closing

Here's what you need to know about wiring money to close on a home, how wire transfers work, timing, & safety tips.

man holding moving boxes
image

CONVENTIONAL LOANS

Rates starting at % (APR %)¹

 

Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

Home Buying Steps

  • Getting Started
  • Finding a Home
  • Getting a Mortgage
  • Home Ownership

Mortgage Topics

  • VA Loans
  • Conventional Loans
  • First Time Homebuyer
  • Home Equity
  • Homebuying 101
  • Checklists
  • Adjustable Rate Mortgages
  • PenFed Top 10
  • Refinance
  • Jumbo Loans
  • FHA
  • Videos

Mortgage Products

  • Mortgage Center
  • Refinancing
  • Home Equity

PenFed HELOC

Rates as Low as % APR* with flexible use of funds

Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

Disclosures

1Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on discount point, which equals percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 75%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.

*Prime Rate is % as of . The APR for this Home Equity Line of Credit (HELOC) is based on prime plus a margin and can change monthly. Fixed Rate Advances will be amortized over the Fixed Rate Advance Term, with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin, and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than % for primary residences and second homes.

  • Annual Fee: Notwithstanding the foregoing, an annual fee of $99 will be assessed on each account anniversary.
  • Home equity lines of credit (HELOC) are variable rate loans and the interest rate is subject to increase after consummation of the loan on monthly basis. Closing costs range between $500 and $8,500 for credit lines of $500,000. Contact a representative for additional details.

Appraisals: PenFed will attempt to establish value via an independent method. If that method is unsuccessful, or the value is not sufficient for the amount requested, an appraisal will be required regardless of CLTV. An appraisal is always required in the following circumstances:

For all loans with a loan amount greater than $400,000.

If an appraisal is required, it must be ordered by PenFed. You will be contacted for authorization and payment prior to ordering. Appraisal fees average $550 to $850 (some run higher).

  • Closing Cost Credit: PenFed will pay most closing costs associated with a home equity line of credit (HELOC), which includes credit report, flood certification, settlement/closing, property ownership and encumbrances search, recording, property search, and quick close. Member is responsible for any city, county, and/or state taxes if the subject property is located in FL, LA, MD, MN, NY, TN, or VA. If an appraisal is required, the member, who is responsible for the fee whether or not the loan closes, will pay the cost.

Interest may be tax deductible, consult a tax advisor for further information regarding the tax deductibility of interest and charges.

Fixed Rate Advance Lock-In You may lock in an Annual Percentage Rate for Advances during the Draw Period. During your Draw Period, you may choose to have three separate Fixed Rate Advances locked in at any one time, with a maximum of two new Fixed Rate Advances per calendar year. Each Fixed Rate Advance must equal or exceed Ten Thousand Dollars ($10,000.00) and you may not request a Fixed Rate Advance that would cause the amount you owe to exceed your Credit Limit. The only term option for your Fixed Rate Advance is 240 months (“Fixed Rate Advance Term”). However, the term of your Fixed Rate Advance cannot exceed your Repayment Period.

Fixed Rate Advances will be amortized over the Fixed Rate Advance Term with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than % for primary residences and second homes and 4.75% for investment properties.

Property Insurance: Property insurance is required.

Multiple PenFed Loans: Multiple PenFed Equity loans and HELOCs are available as long as the member and collateral qualify (except Texas). For Equity loans and HELOCs the total indebtedness cannot exceed $500,000 for all PenFed Equity and HELOCs combined.

PenFed does not lend on:

  • Mobile homes
  • Co-ops or time-shares
  • Properties that are currently listed on the market for sale
  • Commercial property or property used for commercial purposes, even if a residence is part of the property
  • Undeveloped property (land only)
  • Properties with more than 4 units

Properties that are currently under major construction/renovations: Property must be fully livable, with no safety issues. (Examples: no missing rails from stairs/decks, no open walls with wires showing, missing kitchen appliances/counters, missing bath fixtures or unfinished pool).

  • Additional limitations may apply

Home Equity Line of Credit:

  • This Account has a Draw Period of 10 years, followed by a repayment period of 20 years.
  • If only minimum payments are made during the draw period, the loan balance will not decrease.
  • In Texas, the maximum CLTV available is 80% on owner occupied properties. Additional restrictions apply in Texas, so please ask a representative for details.
  • In all other states, the maximum CLTV is 85% on owner occupied properties and second homes. Additional restrictions or requirements may apply based on application characteristics.
  • Property type of Condo has a maximum CLTV of 80%.
  • The maximum CLTV available is dependent on credit qualification.
  • Rates vary depending on owner occupancy and CLTV and other loan criteria.

Minimum Loan Amount Requirements in all States:

  • For an owner occupied property or second home the minimum loan amount is $25,000 and the maximum amount is $500,000 with a CLTV of 85% or less of the fair market value.

Other terms and conditions apply; call 844-918-4307 to speak with a representative for details. All rates and offers are subject to change without notice. To receive advertised product, you must become a member of PenFed.

  • Locations
  • Careers
  • Press Room
  • Foundation
  • Contact Us

This credit union is federally insured by the National Credit Union Administration. Rates are current as of September 2023 unless otherwise noted and are subject to change.

APY = Annual Percentage Yield
APR = Annual Percentage Rate


  • facebook
  • twitter
  • linkedin
  • youtube
  • instagram
Download the PenFed app on Apple Store Download the PenFed app on Google Play
Read More about Equal Housing
Routing #256078446

©2023 Pentagon Federal Credit Union

Privacy
Security
Disclosures
Fees
Rates
Forms
Site Map

We use cookies to provide you with better experiences and allow you to navigate our website. By clicking “I Accept”, you consent to our use of cookies in accordance with our Privacy, GDPR and Cookie Policies.If you are a California resident, please visit our Privacy Policy page for the Notice of Right to Opt-Out of Sharing.

×

IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party Website that is not a part of Pentagon Federal Credit Union.


The content you are about to view is produced by a third party unaffiliated to Pentagon Federal Credit Union. PenFed takes no responsibility for the content of the page.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party site. PenFed Realty, LLC is wholly owned by PenFed and this referral may provide PenFed a financial or other benefit.


For more information about the relationship between PenFed and PenFed Realty, LLC, see the Affiliate Business Arrangement Disclosure.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party Website.


The content you are about to view is produced by a third party website that is unaffiliated to Pentagon Federal Credit Union. PenFed takes no responsibility for the content of the page.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party site. PenFed Title, LLC is wholly owned by PenFed and this referral may provide PenFed a financial or other benefit.


For more information about the relationship between PenFed and PenFed Title, LLC, see the Affiliate Business Arrangement Disclosure.


CONTINUE OR CANCEL

Member Login

Please enter a valid username.

I need help logging in

Having Trouble?
Forgot Username
Forgot Password
Forgot Username and Password
Unlock Account


First time logging in?

Create an online account

Not yet a member?

Become a member and take advantage of products and exclusive offers!

Join Now

Get Started

×

LOGIN

JOIN
Dismiss
PenFed App
PenFed PenFed, Inc FREE - On Google Play