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What are the closing costs for my mortgage?

The closing costs on a mortgage include the fees and charges for all the services needed to successfully purchase your home. The total can be about 3% to 6% of the purchase price, depending on the home value and where you live.

Closing costs may be divided into two types – costs related to the property and costs related to the mortgage loan.

Property-related closing costs may include:

  • Appraisal fee to determine what the home is worth.
  • Home inspection fee to evaluate the home before closing (an optional but recommended service)
  • Title search to ensure there aren’t any issues with the title of the home, such as a tax lien.
  • Title insurance to protect your lender in case there are issues with ownership after the sale.
  • Prepaid taxes – you may need to pay six months to a year’s worth of property taxes in advance at closing.
  • Settlement fee – fee for settlement agent to close your loan
  • Homeowner’s insurance – 12 mos upfront and 3 mos in escrow account
  • Prepaid interest – interest from the day of closing until the end of the month (under mortgage cost)

Mortgage-related closing costs may include:

  • Credit report fee to check your credit report and score.
  • Origination fee or commitment fee for creating the loan.
  • Points can be paid upfront to lower the interest rate on your mortgage – this may raise your closing costs but reduce the amount of total interest you pay over the life of your loan.