You have been looking for a few weeks or more for your perfect home and you found it!  You have been pre-approved and your mortgage requires you to put 10% down.  You are excited about writing up your contract, but now your agent has put a one page form with a bunch of other fees you will need to pay.  What are they all?

This can be confusing and seem a little overwhelming when you first look at it.  The closing costs are the fees that the lender has charged to process the loan, the title/settlement company fees, inspections, and lender escrow requirements, and they are seperate from the down payment.

Some basic examples are below.

Title Charges:  Wire Transfer Fee, Notary Fee, Closing Protection Letter, Deed Recording may vary by county, Mortgage Recording, Title Endorsements (usually 3 on a residential property).  Title Insurance, Broker Fees.

Lender Fees:  Mortgage Origination and Underwriting Fees, Credit Report, Appraisal, Escrow Amounts: Varies by lender/loan type, but 10-13 months of taxes, up front mortgage insurance premium + 2 months escrow, usually 2 months of home owners insurance.

Inspection Fees: (Usually Due at Time of Service): Whole House Inspection, Termite, Radon, Water, Septic etc...

Other:  Upfront Home Owners Insurance, Upfront HOA Contribution Fees (if home is in a Home Owner's Association).  Real Estate Transfer Tax (1% of sale price), Home Warranty (If you choose to purchase), Flood Insurance and Tax Certification.  Any commission you may owe; however, this is very rare.  I have seen a few situations, that in order to secure a loan, a buyer had to pay back income taxes due, etc...

While not complete this gives you a good idea, of the different costs that you will pay in addition to your down payment at closing.  It's important to remember that this is in addition to your down payment.  I usually tell buyers to anticipate that their closing costs will be approximately 7-8% of the sale price of the home.  So if you purchased a $200,000 home, you can anticipate between $14,000-$16,000 in closing costs.

This means if your loan has a required 10% down payment on a $200,000 home ($20,000.00) you can anticipate the amount you will pay at closing to be around $35,000.00.

Before making an offer your agent will provide you with a line by line statement of these closing cost.  This form is called a Buyer's Estimated Closing Cost.  You will need to sign this; however, when you do, you are merely agreeing that you have seen it, as it is an estimate and subject to changes.  When I calculate a Buyer's Estimated Closing Cost, I try to assume worse case scenario for you at closing.  That way you are as prepared as possible for changes through the process.

We will go through this together on a home that you are making an offer so you know what to expect at closing.