If you are buying a home, you’ll often hear the phrase “closing costs” thrown around by your lender or real estate agent. The term itself refers to all fees that are paid to third parties during the process of buying or selling a home.
Some closing costs are paid by the seller, but most closing costs are paid by the buyer. The exact amount of your closing costs can differ greatly, depending on factors that include:

• Location of the property
• Mortgage insurance options
• Amount of your down payment
• Amount of your loan
• The type of loan dictates the down payment
• Cost of the credit report/lender, and more

There has long been a belief that closing costs are paid out primarily to the lender, as a fee for originating the loan. But many closing costs are actually reimbursements for costs covered by the lender to finish legal work on the purchase.
What is included in closing costs?
Closing costs in your area may include or exclude some fees that other cities and states require. In general, the closing costs are paid to all of the following:

• Credit Report – Paid to receive a thorough credit report for review
• Underwriter Fee – Paid to the underwriter to determine loan eligibility
• Home Inspection Fee – Paid to check the home for leaks, damage, etc
• Title Search Fee – Paid to perform a title search for liens on the property
• Title Insurance – Paid to protect your purchase of the home from other claimants
• Survey Fee – Paid to determine your property’s boundary lines
• Attorney Fee – Paid in certain states to buyer/lender attorneys

Depending on your area, this may only be a fraction of the list of potential costs. The good news is that many of these costs are small. But closing costs are not just going to the lender – they are often going to all of the processes that are involved in making sure that you are getting the right loan.
How much are closing costs?
Because so many factors are at play, it is difficult to give an exact number to expect to pay toward closing costs. Some closing costs are also negotiable. The best thing you can do is contact one of our experienced loan originators. They will be happy to talk to you about closing costs, and help you determine what your loan will be. In general, however, you can expect the closing costs to be between 3% and 7% of the total cost of your home.