About Home Loan Closing Costs

When you get a home loan you will need to pay what is known as mortgage closing costs. They are basically fees charged by lenders and third parties that relate to the purchase of your home. This is an additional cost on top of the down payment, and home loan amount. It is paid at the time of closing on your mortgage and is usually paid by the home owner

The actual fees included in the closing costs can vary widely depending on where you live, the Lender and Title Company you use, the type of house that you buy, and other factors. Closing costs often include:

• A credit report fee
• Appraisal fee
• Survey fee
• Lenders fees
• Titles fees and Title Insurance
• Underwriting fee

Typically a home buyer can expect to pay between 2% and 5% of the purchase price of their home in closing costs. By law, a Lender is required to provide to you a Good Faith Estimate (GFE), which is an estimate of what the closing costs might actually be.  Although it is an estimate, and may vary when you are ready to actually close, it will give you an idea what you will pay in closing costs.  With stricter laws, certain fees must have a valid reason in order to be changed; those reasons could include a loan amount change, an interest rate change, loan program change, etc.  These laws were put in place to protect you from seeing huge increases in the fees compared to the initial quote you received from a Lender.  As always, you are not locked into anything until your loan has actually funded, so if the closing costs are not what you expected, you are able to back out of the loan at any point prior to funding.