How to Determine Real Estate Closing Costs

You're buying a home, but the real fun begins once the owner accepts your bid. You must prepare for the closing. You may want to determine closing costs so you're not blindsided by charges you aren't aware of. With some research and talking to the right people, you can make a list of the fees and charges usually due at closing, which helps you determine your closing costs.

Difficulty: Moderate

Instructions

1. Determine if you're paying points on your mortgage. Paying points is a way to lower the lender's interest rate. Each point equals one percent of the loan amount. You must pay these points at closing.

2. Find out how much the appraisal fee is. The appraisal fee is a charge your mortgage company paid to have the property appraised to make sure it's worth more than what you're borrowing. This fee is added into closing costs.

3. Talk to an insurance agent to determine the cost of the title insurance. A title on a house needs insurance to avoid future unauthorized claims on the home. This is another fee that's due at closing.

4. Get all costs relating to the home inspection. A home inspection is usually required prior to the purchase of a house, and the fee for the inspection is added to closing costs.

5. Add in the first year's fee for homeowners insurance, transfer tax, attorney fees, the cost of a title search, an advance on property taxes to be put into escrow and even credit report fees, which you can get from your mortgage company. Some or all of these fees factor into the closing costs.

Tips & Warnings

• Some states don't require a home buyer to use the services of an attorney at a closing.
• Speak to your mortgage representative to get all costs of obtaining your mortgage, including loan origination fees and credit check fees.
• The buyer and seller can negotiate responsibility for some closing cost fees. Talk to your real estate agent for details about who pays what during the closing.
• You can prepay some closing costs such as the home inspection fee so you won't have a huge amount due at the time of the closing.