You can expect to pay out of pocket for some expenses during the mortgage process.
Even if you’re new to the home-buying process, you’re probably familiar with the idea of a down payment and closing costs. But what you might not have anticipated are all of the additional costs — such as home inspections and appraisal fees — that you’ll be expected to shell out before you ever get the keys to your new house. These fees, called paid-outside-of-closing fees (POC), are considered additional costs and aren’t covered by a mortgage.
What fees are considered paid outside of closing?
There isn’t a standard list of fees that are paid outside of closing, but in general, the list would include any expense the borrower pays that’s not part of the closing transaction. Other than appraisal and inspection fees, POC costs could include fees for credit reports, mortgage insurance applications, the lender’s title policy, loan origination, loan commitment, title transfers, and anything paid by the lender to the mortgage broker. However, some of these fees could instead be included in your loan’s interest rate or another settlement charge.
Where can I find the POC fees in my closing paperwork?
On your HUD-1 Settlement Statement, the bank may show an appraisal fee listed as “POC” since the fee was paid prior to closing, when the appraisal was performed. Many of the fees listed on your closing statement will have already been paid before you get to the closing table. But some fees, like what you pay to the mortgage broker or settlement service provider, can be paid after closing. Fees like this are often included in the interest rate or as a separate settlement charge and are not added into the “Total Settlement Charges” on your HUD-1.
Even though your POC fees will have already been taken care of by the time you close on a home, it’s still helpful to have them listed on your closing statement as an overview of all your expenses.