Closing Costs (What You Want To Know Wednesdays)

While you do not necessarily need to provide a 20% down payment for your home purchase, you do need to save money for closing costs. Closing costs are fees charged by the lender when your loan finishes.   A good rule of thumb to keep in mind is that closing costs are typically 2 – 5% of the purchase price. Page 2 of the Loan Estimate will give you an idea of what your closing costs might be. Closing costs cover a wide range of fees, and should be addressed early in the loan process so there are no surprises. Closing costs are paid the day you sign the final loan documents. They can include but are not limited to:

Lender origination fees

Appraisal fees (can also be paid at the time of the appraisal)

Flood certification

Title services

Credit report fees

Underwriting fees

Escrow deposit (can include the first couple months of property taxes and private mortgage insurance)

Discount points (paying extra money to get a lower interest rate)

Recording fee (fee to the county to record new land records)

You can always speak with your Loan Officer and Real Estate Agent to see if you can decrease your closing costs. You can also see if the seller in your transaction would be willing to pay the closing costs, or take on some of the fees, as closing the loan is in the best interest of both parties. Be weary of mortgages that do not have closing costs as they can end up costing you more in the long run. To counteract a lack of closing costs Lenders can give a higher interest rate, or wrap closing costs into the total cost of the mortgage. If this is the case you could end up paying interest on your closing costs.


* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.