Closing costs are the expenses over and above the price of the property, that buyers and
sellers normally incur to complete a real estate transaction.
TITLE/ATTORNEY FEES
These are the fees that related to making sure that the seller of the property can transfer the title (deed) of the
property to you without also giving you any liens or issues also attached to the property. It also protects the lender
from issues as well. These fees include the title search fee and title insurance fees. Title fees also include the cost
to record and register your ownership at the courthouse after closing, as well as the use of a notary that witnesses
your official signatures on your closing documents. If you are using an attorney or settlement company to help you
with your closing, you’ll be asked to pay them for their involvement too.
PRE-PAIDS & ESCROW
Property tax pro-rations and homeowner’s insurance premiums are included in your closing costs, because you are
paying them before your regular mortgage payment kicks in. They are often called “Pre-Paids.” This may also
includes pre-paid interest to cover the gap between when you close and when you make your first mortgage
payment. If you plan on including your property taxes and homeowner’s insurance in your monthly payment,
allowing your lender to pay these bills on your behalf in the future, you will need to make an initial deposit of funds
for any bills that need to be paid after closing.
MORTGAGE INSURANCE
If your loan type requires some type of funding or guarantee fee (most common with government-insured loan), you may
have to pay the total amount upfront. Loans with a small down payment involve substantially more risk for the lender so
mortgage insurance provides the lender protection in case you go into foreclosure. Although these upfront fees are usually
rolled into the total amount you are borrowing, it will still be itemized separately on your Closing Disclosures when you’re at
closing
LOAN-RELATED/LENDER FEES
These fees include any origination charges, application fee, processing fee, credit report fee, and any discount points
you want to pay to get a lower interest rate. Some lenders also include underwriting fees,, wire transfer fees, termite
inspection fees, and your appraisal in this category.
PROPERTY-RELATED/LENDER FEES
During h\the loan process, your property is appraised to determine value. It may also be inspected for pests and for
any other structural, electrical, or plumbing issues. The cost of these items may show up as closing costs if you
haven’t already paid for them prior to closing. You may also see a survey fee if there is a need to confirm property
lines. Both the lender and FEMA requires properties be evaluated for the need for flood insurance and there’s a fee
for that as well.
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