How to Estimate Closing Costs
All those charges, fees and miscellaneous costs sure add up quickly. If you remember the details, you'll have a good idea of what to expect at closing.
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Instructions
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Add up fees for loan processing, document preparation, tax service (to make sure the taxes are paid during the loan), flood service (to make sure the property is not in a flood zone), loan underwriting and wire fees (the cost of wiring money).
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Include fees for courier service, notary fees, appraisal, credit report and inspection fees.
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Add in the cost of title insurance and escrow fees based on the purchase price and loan amount. (Call a title company to get this information.)
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Remember property taxes. Depending on when the transaction closes, you may have to pay part or all of an installment.
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Include homeowner's insurance - also known as hazard insurance - for a year.
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Add in loan fees or points paid to the lender. (A point equals 1 percent of the loan amount.)
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Tips & Warnings
By law, lenders are required to give you a written estimate of closing costs within 3 days of accepting your loan application.
Depending on the state in which you live, a real estate attorney or a title/escrow company will be involved in the transaction.
Closing costs run anywhere from $2,500 to $5,000 per transaction for an average home.
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Comments
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writerighter
Aug 01, 2010
Among several other changes, lenders now have to give a copy of the HUD-1, which shows the actual settlement/closing costs, to a consumer one day BEFORE a real estate transaction closes, so there is less room for a lender to get away with a surprise, last-minute "fudging" or changing of the numbers at the closing table. (These are the numbers that would be originally shown or taken from the Good Faith Estimate, a copy of which one is required by law to get from a lender within three days.) -
Savvyone
Jul 16, 2010
Very good information to know.
