How to Calculate Closing Costs on a Mortgage

Buying a home and securing a mortgage may well be the most stressful experience of your life--or at least it will definitely seem that way at the time. While the economy is slowing down, however, it is what they call a "buyers' market"--meaning there is no better time to buy and finance a home.

Difficulty: Easy

Instructions

1. The most daunting step in the mortgage process is finding a home you are willing to invest in. Once you have found a piece of property you are interested in, it is best to start talking to banks and discussing mortgage possibilities to find out how much you can qualify for.

2. Once you have a figure from the bank, use the tools provided below to start assessing if you can actually afford it. The first one you'll want to use is the Mortgage Payment calculator. This will give you an idea of what you'll be paying per month.

3. Once you have all your information on hand (your home purchase price, loan amount, term, interest rate, etc, as listed above), using the Closing Costs Calculator below, input your numbers to see what your closing costs will look like.

4. With calculations in hand, you can then discuss with your bank any ways to lower these fees. For example, many banks will lower or eliminate these costs for repeat customers. Bank of America also has started a program with no associated fees.

5. Enjoy your new home! Congratulations!

Tips & Warnings

• Make sure to factor all these costs into the financial encumbrance of buying a home. You don't want to get caught unawares!
• Make sure to use a reputable bank that will not overextend your credit--while it seems like a good idea at the time, this is predatory behavior that could result in you defaulting on the loan and losing your home.

Resources

• Mortgage Calculator
• Closing Costs Calculator
• Bank of America No Fee Mortgages

[smc61]

on 10/29/2008 In regard to Who Can Help with Closing Cost and Tips & Warnings I have a good suggestion for making sure you get the closing costs you were quoted. Being in the mortgage business for the last 15 yrs I can tell you that you still have a couple of options to make sure that you were not unfairly overcharged. Your first course of action should be to get a solid comparison between the Good Faith Estimate and the HUD-1. One very helpful site is Closingcostfax.com. The site is run by software that compares the Good Faith Estimate to the HUD1 in a matter of seconds and provides you with a side by side comparison to any changes that took place from the original Good Faith Estimate to the HUD-1. Once you have the comparison in hand send it to the originator and ask for a detailed explanation for any cost that changed or were added to the HUD-1