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Step 1
Find a closing-cost calculator for a fixed-rate mortgage available from a legitimate website---preferably from a well-known financial institution such as Bank of America. Calculators can be found through any search engine by entering "calculating closing costs" and "fixed-rate mortgage." Choose carefully and use a free calculator. See resources for further information.
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Step 2
Create a list of the mortgage loan terms and fees. These fees involve the actual loan itself and compose the largest part of the mortgage loan. The main things to look at are the purchase price (total price of the home), loan amount (purchase price less down payments), interest rate (the interest paid to the lender on the loan amount, given as a yearly percentage) and terms (the length of the loan in years, usually 15 or 30 years). Another thing to consider is the discount points, which are pre-paid items that are paid in advance, such as interest and hazard insurance. Each point is equal to 1 percent of the loan amount and added to the closing costs at closing or amortized over the term of the loan.
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Step 3
Create a list of the lender fees associated with the mortgage loan. These are the fees the lender charges the borrower to receive the loan. There are several of these fees and they vary from state to state and lender to lender, so they must be obtained from the actual lender if the information is to be accurate. Some of these fees can include the origination fee (the lender charge for funding the mortgage; it is in addition to the discount points), lender fees, lender title insurance (amount that the lender charges to ensure the title transfer is good) and escrow fees (reserve payments for such things as hazard insurance, taxes and mortgage insurance).
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Step 4
Create a list of the appraisal fees. These are fees for items paid to people outside of the lender that will tell the lender what the property is worth and the borrower's credit history. Some of these can include the credit report (to ensure the borrower's ability to repay the loan; one for each person that is part of the loan if there are co-borrowers), appraisal report (paid to an official appraiser who will determine the properties of actual value), survey fee (paid to an official surveyor to determine the legal size of the property and land) and a termite-infestation report (paid to an inspector to determine if the house has termites).
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Step 5
Create a list of the fees to transfer ownership. These are fees paid to the local government to transfer the ownership of the property from one person to another. There are usually two fees associated with the transfer of ownership which includes the recording fee (paid to document the transfer of ownership) and the transfer tax (paid to the local city, county and state to transfer ownership). Each locality has its own requirements for the transfer of ownership, so be sure to research what is required.
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Step 6
Create a list of the yearly fees each year that the property is owned. These fees usually include yearly property taxes (paid to the city, county and state government; also called "real-estate taxes" and are given as a percentage of the home's value) and yearly property insurance (to protect the home from weather-related damage and secure the loan for the lender; some insurance does not cover catastrophic damage, such as tornadoes and floods). These fees can change every year, depending on laws and any changes to the property, so they will only be calculated for the year of the purchase of the house before closing costs. These fees will affect the escrow part of the closing costs.
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Step 7
Create a list of the other fees associated with the loan. These can involve many different items that can vary depending on location and the specific loan. Some of these fees can include a lawyer's fees and any remaining down payment owed.
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Step 8
Enter the items from Steps 2 through 7 into the calculator from Step 1, then click on the "calculate" or "next" button at the bottom of the calculator. The closing costs will be given on the resulting page along with the breakdown of how the total cost was derived. The Bank of America calculator breaks the closing costs down into three items: fees (all the origination fees, discount points and other prepayments), impounds (advanced payments for homeowner insurance premiums and real-estate taxes paid into the escrow account for two months but can vary depending on location and lending institution) and prepaid interest (interest paid to the lender in advance after closing the loan; usually 15 days worth).
