Mortgage closing costs are required to close your loan application. The best way to know how much your closing costs will be is to ask for a good faith estimate. This is important because the fees and costs may vary depending upon your particular loan scenario and municipality.
Not all closing costs and fees go to the lender. There are third-party fees and state and local government fees that must be covered.
Mortgage closing costs are fees charged for services that must be performed to process and close your loan. At the time you apply for a loan, lenders are required by law to disclose to you, in writing, what the estimated mortgage closing costs will be. This is known as the Good Faith Estimate.
In addition to making your down payment, there are other costs and fees associated with your home purchase. Average closing costs generally range from $2,500 to $5,000. A sizeable amount of money when you consider this is paid upfront at closing. But where exactly does it all go?
A common misconception about mortgage closing costs is that they all go to the lender, when in reality, many of the costs are related to services performed by others. Mortgage closing costs cover expenses associated with getting a home loan, from inspections and appraisals to title insurance, taxes and more. It is important to check your lender fees and closing costs carefully. If a lender boasts incredibly low rates, its possible they will try to make up the difference with exorbitant lender fees. If a lender boasts little to no fees, then they are most likely making up the difference with a higher rate.
For a list of closing cost estimates, you or your borrowers may find this to be useful. It is the source from the article above Your Typical Closing Costs
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