Closing Costs

Closing costs can vary depending on who you're getting your mortgage from, ranging anywhere from a few hundred dollars to quite a few thousand. Most lenders can provide an estimate as to these costs, but they are just that - and may end up varying slightly when it's actually time to close. Some of the more common costs you'll be looking at include:

This can be referred to by a number of different terms, but all boil down to the lender charging a fee equal to a small percentage of the loan value. When referred to as 'points', this simply means the percentage the lender is charging; 2 points means 2%, which would equal $2000 for a $100,000 loan. These can vary greatly from one place to another, and should be considered before you decide on a final lender since they can really add up on more expensive homes.

These only apply to buyers who are assuming an existing mortgage, FHA and VA loans.

It's not uncommon for the lender to require you pay the credit reporting fees when you hand in your application for processing. This usually costs around $50, but may be slightly more or less depending on which credit bureaus your lender orders reports from (all 3 is common when you're flipping the bill).

If the lender needs re-assurance of the value of the house, they may require it be professionally appraised. This can cost from $200-$400 dollars, possibly more in extreme cases.

Not nearly as common as value appraisals, but if the land itself needs to be surveyed for any reason, this can cost another $200-$400.

Anywhere from $30 to $150 may be charged to prepare and witness the documentation pertaining to closing.

This is a fee usually charged by the lawyer who handles the closing, used to examine records on the property to check for any liens, claims or discrepancies on the title that might affect the value or ownership of the property. While most common issues are found during this title search, it's still possible that for one reason or another the search did not reveal a problem, which is where the insurance comes in. Title insurance is also usually offered along with the title search, and protects the buyer financially against any future claims that may be made if issues arise down the road.

Some expenses that are not necessarily due to the lender directly may need to be accounted for beforehand in an escrow account. This can include Private Mortgage Insurance, property taxes, home insurance and other such fees, which some lenders require you provide to be held in escrow until they are due. This amount can vary significantly depending on whether you require PMI or other special insurance and of course, the value of the home.

This is a fee some lenders may charge for the preparation of the note, deed of trust, and any other legal documents required. Ranges from $50 to $100.

In the event that your lender requires that property taxes be handled by themselves or a third party, there may be an additional fee charged to handle these payments. This usually runs between $50 and $100.

This fee generally comes before closing, but after an offer has been accepted. Your home inspection can cost anywhere from $200 to $600 depending on who you hire and the difficultly of the inspection. While a home inspection is instigated on your end and isn't required in most cases, it's highly recommended and should be a condition in your offer to purchase to avoid potential disaster.

Like home inspectors, the fees can range a fair bit depending on which attorney you decide to hire, but costs for preparing the transaction usually range from $500 to $1500.

Despite the length of the list already, there's still a few other small things you might want to have a few dollars budgeted for to ensure a stress free closing.

While its not possible to give an exact percentage with all the variables that exist in determining closing costs; as a rule of thumb you should budget as much as 6% of the total purchase price for when the time comes. You should be able to get the exact figures from your legal representation and mortgage lender before then.