The Pre-Closing Period: Closing Costs

Closing costs typically include but are not limited to:

• A loan origination fee: This is the fee your lender charges for processing and providing your loan.
• Points: One point equals one percent of the loan amount. By paying a point, you are prepaying mortgage interest to your lender, and you get a lower interest rate in return. (Generally, the decision to purchase points is left up to you.)
• A title search and title insurance: Your lender will require you to pay for lender’s title insurance, which protects them against loss in case the title company misses something in their search, but you should also consider purchasing owner’s title insurance, which protects you.
• An appraisal: An appraisal is a determination of the home’s market value. A lender will typically not provide a mortgage for greater than the home’s appraised amount.
• A survey: A survey confirms the legal, recorded boundaries of the property.

Closing Costs: Recording Fee, Mortgage Interest, Escrows

• A recording fee: This is a fee that is charged to record the transfer of ownership in the county or town records.
• Mortgage interest: At closing, you will have to pay the interest that will accrue on the mortgage between closing and the end of the month.
• Escrows: If you will be paying your property taxes, homeowners insurance, mortgage insurance, and/or homeowners association dues through an escrow account you may have to deposit a reserve with your lender. You may also be required to make upfront payments on some of these items.

Payment Method

Once you have looked over and are satisfied with the Closing Disclosure, you should go to your financial institution and get a cashier’s check for the amount that you agreed to pay at closing. (This should appear on the bottom of the first page of the statement.) Personal checks are generally not accepted.

Next Topic Closing