For many home buyers, closing costs are a mystery. If you are purchasing a home, you need to be aware of the closing costs well in advance of the closing date. Unfortunately, this is seldom the case. If you are purchasing a home, here are the steps in calculating closing costs.
Find out the fees the bank will charge you for in conjunction with loan. Ask your bank for the list of fees associated with the loan. Fees vary from state to state and bank to bank. Typical and approximate fees include:
Appraisal fee Survey fee Cost to run the credit report (two credit reports, if there are two of you buying) Loan origination fee Tax service fee Underwriting fee Flood certificate
Pre paid items that you will have to pay for a year in advance will be added to the closing costs. They include interest paid for a year in advance as well as hazard insurance on the home.
There will be additional reserve payments added to the closing costs such as an additional two months of hazard Insurance, two months of taxes, and two months of mortgage insurance.
There will be title charges that transfer ownership of the home to you in the closing costs. The include may include title policy fees (which depends on the loan amount), endorsements and a courier fee.
You will also have to pay the local recording authority to record your ownership of the home. You will have to pay for recording fees, documentary stamps and intangible taxes, which will vary by state.
Add all of these items together and add your lawyer's fees and any remaining down payment that you owe, and you will have your closing costs calculated.
Research each item for yourself, as these amounts are approximate and often based on locality. Shop around for appraisers and survey companies. These fees vary from company to company, and while the bank would like to use their own appraiser, you may be able to talk them into using an appraiser you found.
Don't rely on early ballpark figures as reliable closing costs estimation.