Common Closing Costs for Buyers

Your lender was required to send you a good faith estimate of settlement costs within three days of receipt of your loan application. Also, you have the right to review your HUD settlement statement one day before the date you close. (Ask your title professional for a copy). You'll need to get the exact amount required for closing prior to the close date, since generally you'll need a cashier's check to cover your closing costs. Closing costs typically include the following:

• Down Payment.
• Appraisal fee. Many lenders require this fee be paid up front, so you may not have to pay it at closing.
• Loan origination fees.
• Points, if any. A point is a 1% loan discount fees that you pay to receive a lower interest rate.
• Credit report fee.
• Private mortgage insurance premium. Note that on some types of loans (especially those with a "second note"), this may not be required. However it will almost always be required if you're borrowing more than 80% of the value of the home without a second mortgage.
• Insurance escrow for homeowners insurance, if being paid as part of the mortgage.
• Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.
• Deed recording fees.
• Survey or other reports you've ordered that have not been paid for in advance.
• Your share of title insurance policy premiums.
• Inspection fees -- building inspection, termites, etc. Note that some of these may be paid by the seller.
• Notary fees.
• Prorations for your share of costs, such as utility bills and property taxes.

A Note About Prorations: Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6th of the month. You would owe the gas company for only the days from the 6th to the end for the month. The seller would owe for the first five days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.