Question

What are closing costs?

Answer 1

Closing costs are financing and legal costs associated with a home mortgage. They can vary significantly by type loan, who you get a loan through and by state. Some people call "Prepaid Items" closing costs although this is not technically correct. Prepaid items are 1)Homeowner's Insurance (typically 1 year's), 2) Partial month's interest which will vary significantly by what day of the month you close, and 3) Partial year's property taxes. Closing costs are primarily, 1) Mortgage origination fee by your broker or lender, 2) Discount Points, although this is not real common (basically buying down your interest rate) any more, 3) Loan Processing fee, 4) Lender underwriting fee, 4) Appraisal fee, 5) Attorney cosing fee, 6) Title search fee, 7) Title Insurance (Your's and the lenders), 8) Recording fees (local and state), 9) Mortgage Insurance for some loans above 80% LTV, and 10) Miscellaneous smaller fees such as Credit Report, Wire transfer, flood search, tax service (lender's protection to know if you don't pay your property taxes), etc. The Closing Costs (excluding Prepaid Items) can range from 0% (lender is building into the rate) to 7%. Loan size will have a big effect on this %. All these should be on your GFE (Good Faith Estimate), required by law for the lender/broker to provide you. Hope this helps.



is this what you mean or am i going crazy?

Answer 2

Thanks :)