The Funds Needed at Closing .. and How They are Figured

Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI


The Funds Needed at Closing .. and How They are Figured



     Most new mortgage clients I speak with have pretty basic concerns regarding their upcoming financing.  One of the questions I hear most often is ...

     How much money will I need at my Closing?
 Get a Quote!     A simple and quick answer might be provided by the following math equation:
Down Payment + Closing Costs/Pre-Paids 
                   Total Funds to Close
     But unfortunately, it's typically not that simple. Here's why ...  
     While the above equation is an appropriate starting point for buyers/borrowers, the actual amount of funds needed at the time of Closing often decreases during the time of mortgage processing.  
     How?  Often, during the processing of a mortgage or prior to Closing taking place, some items or fees get paid for.  
     Two (2) such fees are:
  1. The Appraisal Fee
  2. The Homeowner's Insurance First-year Premium


     Other items and services may also be accounted for AT CLOSING, in the form of Credits due from the Seller:  
     Examples of these include:
  • Real Estate Taxes (Due from the seller)
  • Earnest Money paid (Essentially, an advance towards the down payment, paid by Buyer)
  • The Seller's Portion of Title Insurance (in some States

     The amount you owe at the time of Closing can also fall should the following items be applied towards Closing Costs/Pre-paids:

  • Seller Credit
  • Lender Credit
     As you can see, the simple equation provided above becomes much more complicated as your mortgage progresses.  While the down payment portion of the equation typically remains pretty straightforward, the amount owed for additional fees can change ... or be decided upon ... as your mortgage process progresses.  
     Once those decisions are made, the monetary difference that remains is funded either by the Loan Amount requested or ... you guessed it ... via another equation:
Purchase Price - Loan Amount =  Down Payment
     Below you'll find examples of the Closing Costs you might encounter.  (Costs vary by State and/or Mortgage Lender.  Talk to me to receive definitive Costs for your Chicagoland/IL/WI financing.)     

     Examples of Closing Costs followed by the Entity charging those fees :

 Document Checklist
  • Appraisal Fee - Borrower (Pre-Pays Lender @ Application)
  • Real Estate Transfer Taxes - Per RE Contract (IF paid) (Paid @ Closing)
  • Escrow/Settlement Fee - Title Company (Paid @ Closing)
  • Title Insurance - Title Company (Paid @ Closing) 
  • Recording Fees (Mortgage, Deed) - Title Company - (Paid @ Closing)
  • Attorney Fees (In certain States) - Attorney (Paid @ Closing)
  • Flood Certification Fee - Lender (Paid @ Closing)
  • Origination Fee - Lender  (Paid @ Closing)
  • Credit Report Fee - Lender (Paid @ Closing)
  • Processing Fee - Lender  (Paid @ Closing)
  • Underwriting Fee - Lender  (Paid @ Closing)
  • Discount Points (IF paid) - Lender  (Paid @ Closing)     


     Pre-Paid Items include:
  • 1st Year Homeowners Insurance Premium
  • Impounds for Real Estate Taxes and Insurance
  • Homeowners Association Dues (IF applicable)
  • Interest Charges (Varies with Closing Date)
  • Mortgage Insurance (IF applicable)


     Once again, the lists above aren't an all-inclusive list of what you as a Buyer/Borrower might encounter in your individual transaction.  Local or state practices may add or subtract to the costs presented here.      
     But the lists make one point very clear:  Borrowers need to be aware that there will be extra costs that accompany buying their home beyond their down payment and future monthly mortgage payments.  And they need to plan for them.
     There are several different ways to do that. That's where I (your Mortgage Originator) come in. 
     Prior to entering into a Real Estate Contract:  Contact me.  We will discuss all options available to you.  That way you know and thoroughly understand the costs needed when you buy and finance a home ... and you can make the wisest decisions moving forward.  
     No surprises encountered.  Just a stress-free and successful home buying and Closing experience ...

     * Hoping to Buy or Refinance a Home in New Lenox or elsewhere in the Chicagoland area? Contact me!  I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
     I can be easily found at:


Gene Mundt
Mortgage Originator - nmls #216987 - IL Lic. 031.0006220 - WI Licensed
American Portfolio Mortgage Corp.
nmls #175656
Direct: 815.524.2280
Cell or Text: 708.921.6331
eFax: 815.524.2281
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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656


Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 


Your Referrals & Testimonials are Always Greatly Appreciated! 


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Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Ginger Harper 12/08/2016 05:10 AM
  2. Gabe Sanders 12/23/2016 11:45 PM
  3. Tony and Suzanne Marriott, Associate Brokers 01/07/2017 05:54 AM
  4. Susan Haughton 01/07/2017 10:01 AM
Lending / Financial
Illinois Will County New Lenox
Chicago Area Real Estate BUZZ!
1st Time Buyers
buying a home
closing costs
buying a first home
funds to close
mortgages and lending changes
how to figure closing costs

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Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker and Attorney Licensed in DC, MD, VA,

I am so glad that you got a feature for this! It is really helpful to use articles like this to explain to buyers how much they are going to need at closing! 

Dec 07, 2016 07:18 PM #6
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude - Carlsbad

Hi Gene

This is so well done. It can get pretty complex when you start talking with buyers about the funds needed to close, and some of this might surprise buyers. It's an important part of the education process from the beginning!


Dec 07, 2016 09:45 PM #7
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

One step at a time I suppose and everything takes care of itself after a certain point

Dec 07, 2016 11:09 PM #8
Sham Reddy
H E R Realty, Dayton, OH - Dayton, OH

Thanks for sharing!!!

Down Payment + Closing Costs/Pre-Paids 
                   Total Funds to Close
The above equation is an appropriate starting point for buyers/borrowers, the actual amount of funds needed at the time of Closing often decreases during the time of mortgage processing. 
Dec 08, 2016 04:51 AM #9
Chris Lima
Atlantic Shores Realty Expertise - Port St Lucie, FL
Local or Global-Allow me to open doors for you.

This is a great post to share with buyers.  There are lenders out there, thankfully far and few between, that just shove a sheet of paper under the buyer's nose and expect them to understand all of those "FEES". 

Dec 08, 2016 06:08 AM #10
Nick & Trudy Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtors, Philly Main Line

Well explained that these costs vary and can go up and down during the transaction period.

Dec 08, 2016 06:45 AM #11
Harry F. D'Elia
Real Estate and Beyond, LLC - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

How many of you ever had a buyer fail to bring money to close?

Dec 08, 2016 07:34 AM #12
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Very important subject not discussed enough thank you Gene. I consider this valuable post your electronic calling card...Keep up the good work Gene

Dec 08, 2016 07:47 AM #13
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

Gene, this is something for all of us to reblog becasue the information is accurate and to the point.

Dec 08, 2016 08:10 AM #14
Corinne Guest
Barrington Realty Company - Barrington, IL
The Choice of Professionals for Luxury Home Buying

Great explanation, it's a question we often get asked as Realtors. For me, next purchase will be cash!

Dec 08, 2016 08:57 AM #15
Ernest Villafranca

NRCC's are around 3% of the purchase price. Quick ROT.

Dec 08, 2016 11:44 AM #16
Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

I will approximate the amount when a buyer thinks they have a house in mind and when we find the special house we get their loan officer to work out the numbers so there is no surprise when it comes to close.  If they don't have enough money it can be very disturbing for them.

Dec 08, 2016 06:36 PM #17
Patricia Feager
Selling Homes Changing Lives

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi - I am so thankful for this post! You laid it all out there in a story format that I can understand without feeling like I'm walking in the forest at night bumping my head into trees and falling into the mud!


Dec 10, 2016 10:48 AM #18
Amanda S. Davidson
Amanda Davidson Real Estate Group - Alexandria, VA
Alexandria Virginia Homes For Sale

Gene, great post! Buyers need to know and understand what goes into calculating  funds needed at closing. You laid it out in such a  clear and concise fashion - very easy to understand!

Dec 11, 2016 08:35 AM #19
Yolanda Cordova-Gilbert
Sitterle Homes - Richmond, TX
Sitterle Homes


 This is a great way of explaining of how funds are needed to close and congrats on the feature!

Dec 11, 2016 02:23 PM #20
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thanks Gene.  This is very useful information for anyone who has questions about their closing costs.

Dec 14, 2016 04:50 AM #21
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude - Carlsbad

Hi Gene

I came BACK to read this because of all the good information, and in thinking more about the post I wrote about closing costs. It's pretty complicated sometimes but buyers need to know up front about what they can expect, at least in terms of an estimate. No one likes surprises when it comes to financials!


Dec 21, 2016 10:58 PM #22
Roy Kelley
Realty Group Referrals - Gaithersburg, MD
Roy and Dolores Kelley Photographs

Congratulations on your feature recognition. This is excellent information to share with prospective mortgage borrowers.

Dec 23, 2016 06:10 PM #23
Kat Palmiotti
Grand Lux Realty, 914-419-0270, - Monroe, NY
The House Kat

This is a thorough list of possible funds needed at closing - to make it even trickier, who pays what can be dramatically different depending on where you live.

Dec 24, 2016 03:20 AM #24
Tony and Suzanne Marriott, Associate Brokers
BVO Luxury Group @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi "Down Payment + Closing Costs/Pre-Paids = Total Funds to Close...But unfortunately, it's typically not that simple. Here's why...While the above equation is an appropriate starting point for buyers/borrowers, the actual amount of funds needed at the time of Closing often decreases during the time of mortgage processing."

Right on target - and - re-blog!

Jan 07, 2017 05:53 AM #25
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Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

708.921.6331 - 40+ yrs experience
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