What Makes Up Closing Costs?

Posted by Jace Stolfo on Thursday, April 24th, 2008 at 3:26pm.

The total closing costs associated with buying a home can vary greatly.  Generally speaking, a $200,000 loan will have approximately $5,000 to $6,000 in closing costs.  Keep in mind that you can negotiate to have the seller to pay these.  Many buyer's I work with prefer to do this so they can keep more money in savings or use for improvements to the home.

Costs Associated With Your Loan

  • Loan Origination Fee -  Typically 1% of the loan amount. This is usually how the loan officer is paid.  If they don't charge you an origination fee they're making it up on the interest rate.
  • Doc Prep Fees -  ($300+/-).
  • Miscellaneous Lender Fees - ($200+/-).
  • Appraisal - ($350+/-).  It's customary in the Boise area to ask the seller to pay this.
  • Loan Discount Points - One discount point is 1% of the loan amount.  You can pay discount points upfront so you can have a lower interest rate on your loan.
  • TIP* - Always ask a lender for a "Good Faith Estimate." This will disclose the fees they intend to charge you.
Pre-Paid/Prorated Items
  • Pre-Paid Interest - (For your loan).  Depends the closing date, if middle of the month then you would pay 15+/- days of prepaid interest.
  • Escrow Reserves - Prepay several months of property taxes and home-owner's insurance.
Fees from the Title Company
  • Escrow Fees - Based on the sales price & usually split equally with the seller.
  • Property Taxes - Pro-rated based on closing date.
  • Recording Fees - fee from the county.
  • Title Insurance - usually seller pays for standard coverage and buyer pays for extended.
There may be other closing costs when buying a home depending on the specific agreement (survey, inspection, etc.).  Your agent or your lender should be able to estimate these costs for you.

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