What are closing costs is a question I get almost every day.  Many home buyers are not aware that in addition to their down payment, they will also need money for closing costs and are very shocked when they find out just how much they will need in order to settle on their home.

Closing costs are fees paid at the time of settlement (when you sign the papers for your new home). These fees could include, points, origination fees, title search, insurance, taxes, appraisale fees, insurance, recording fee, notary, credit report, endorsements and conveyancing to name a few.

These fees are common but can add up to thousands of dollars.

Closing costs are foreign to most people so I figured i would list what you can expect to pay at closing. Keep in mind that not everything may be on your settlement sheet that I list or perhaps you may have more items depending on where you live.

I will break the fees up to make it a bit more simple:

Items Payable In Connection With The Loan such as:

• any loan origination fees
• loan discount points
• appraisal fees
• credit report
• any inspection fees not already paid
• mortgage application fee
• flood certifciation fee
• tax service fee
• underwriting fees

Items Required By Lender To Be Paid In Advance:

• any interest per day from the day of closing to the end of the month
• mortgage insurance
• hazzard insurance premium 

Reserves Deposited With Lender (lso known as escrows:)

• hazard insurance for 3 months
• mortgage insurance for 2 months
• county property taxes for 7 months
• school taxes
• city taxes

Title Charges:

• settlement or closing fee
• abstract or title search
• title examination
• title insurance binder
• document preparation fee
• notary fee
• attorney fees (if you used an attorney)
• title insurance
• lender's policy
• owner's policy
• closing service letter fee
• record mortgage

Government Recording And Transfer Charges:

• recording fees deed/mortgage
• city/county/tax/stamps
• state tax/stamps
• transfer tax

Additional Settlement Charges:

• survey
• pest inspection
• fed ex mortgage pkg/payoffs
• reimburse seller for taxes paid through the end of the year
• gas balance due
• water service balance due
• reimburse cert fees/use and occupancy 
• real estate office conveyancing fee
• commission

This list is not only for buyers or only for sellers. I have included what a buyer and a seller can expect to pay.

You should have an idea of all of these costs prior to settlement because you should have met with your lender and received a Good Faith Estimate.

I do hope this helps you understand a bit better about what closing costs are.