Reducing Last Minute Surprises by Calculating Closing Costs

By Karen Lawson
LoanPage.com Columnist

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You've heard about closing costs, and wonder what they are, and how they can affect the overall cost of purchasing a home. Closing costs are charges for services associated with transferring title from buyer to seller, and also include your mortgage lender's charges for making your mortgage loan.

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Estimating and Understanding Closing Costs

Once you've made an offer on a new home, you will receive an estimate of closing costs charged to buyer and seller. This information is presented on a form called a HUD-1. This form is widely used, and is familiar to lenders, title and escrow companies, and real estate professionals. It's important to go over these charges carefully, and to ask questions of your mortgage lender and/or escrow company to help you understand what you're paying for and why. It's also possible to use a closing cost calculator, provided free of charge online, to estimate your closing costs

Closing Costs Influenced by Regional Custom and Lender Requirements.

Typical closing costs charged to buyers may include lender's fees, documentation fees, points, appraisal costs, home inspection and warranty fees, property taxes and mortgage interest incurred between the time escrow is opened and your first payment is due. You may also be asked to pay all or a portion of an escrow company's or attorney's fee for handling the closing. These costs can vary according to regional laws and custom. Lenders charges can vary considerably depending on type of mortgage you want and your credit history. Some costs may be negotiable, and its always a good idea to discuss your concerns with your lender well in advance of your closing date.

About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She holds an MA degree in English from the University of Nevada, Reno.

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