Thursday, July 21, 2016

Understanding Closing Costs

Closing costs are one of the many talked about but not necessarily understood components of obtaining a home mortgage.

Understanding and comparing closing costs are an important part of shopping for a mortgage.

Closing costs are primarily made up of fees associated with the closing and mortgage process that are passed on to the buyer.

On average closing costs are 2-5% of the home price.

They include items such as:

  • Obtaining a credit report
  • Processing paperwork for the loan (loan origination fees)
  • Legal fees
  • Appraisals
  • Surveys
  • Title insurance
  • Title searches
  • An escrow deposit
  • Recording the transaction in the city or county’s records
  • Underwriting the mortgage (evaluating the borrower and the property)

Most of the closing costs are the responsibility of the buyer, however sometimes the builder or seller will contribute.  Talk to your lender to get a full explanation of the costs so their won't be any surprises at closing!

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