The Closing Cost Guide:


The total amount of closing costs will vary depending on the specific details of the sale and the location, but it’s not uncommon for them to amount to between 2% and 5% of the total price of the home.

Here is a breakdown of some of the common closing costs:

  1. Loan Origination Fees: These are fees charged by the lender for processing the loan. They are often calculated as a percentage of the loan amount.
  2. Appraisal Fee: Before a mortgage lender approves a home loan, they’ll need an appraisal of the home’s value. The buyer usually pays this fee.
  3. Credit Report Fee: Lenders will pull your credit report to determine your creditworthiness. This fee covers that cost.
  4. Home Inspection Fee: This is not always required, but some buyers opt for a home inspection to find any issues with the home before they buy it.
  5. Title Services: These fees cover a title search of the public records for the property, title insurance to protect the lender against title issues, and settlement services if you use a third party for it.
  6. Survey Fee: This is the cost for confirming the home’s official boundaries.
  7. Prepaid Costs: Homebuyers typically pay one year of insurance upfront. You may also have to pay some property taxes in advance.
  8. Discount Points: This is an optional fee. Homebuyers can purchase these to lower their mortgage interest rate.
  9. Escrow Deposit: Sometimes referred to as “prepaids,” this is money that the lender sets aside for future property taxes and homeowner’s insurance payments.
  10. Underwriting Fee: This is the cost that the bank or other lender incurs to evaluate and verify your loan application.

It’s important to note that the buyer usually pays most of the closing costs, but the seller may also have some responsibility, such as paying the real estate agents’ commissions. The specific division of these costs is often a point of negotiation in the real estate transaction.

Before you close on your home, your lender is required to provide you with a closing disclosure, which is a detailed explanation of all the costs related to your mortgage. This will give you a chance to review all the charges before the transaction is finalized.

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