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Home Mortgages: What are Closing Costs?

The final hurdle all homeowners cross before they’ve finally purchase their home are closing costs. These fees typically represent a significant amount of the total purchase, and can cost between three and six percent of the mortgage. Below we’ll explain why these expenses are incurred and what you can expect to pay at closing.  


Closing fees are a cost associated with the refinancing or transfer of ownership during the home purchasing process. These fees are required to complete a real estate transaction officially. The expenses are paid by either the buyer or seller on the settlement date. Law requires lenders to offer a loan estimate within three days of receiving an application. The information on the application will dictate the closing cost; however, these fees are not always final and are subject to change.

The lender should issue a closing disclosure statement at least three business days before the closing date. The closing costs estimate on these documents should be closer to your total expected payment. Before closing, compare the final fees to your initial loan estimate and ask your lender to explain any changes in costs.


On average, most home buyers will pay between three and six percent of the purchase price of their home in closing costs. For example, if your home cost $200,000, you may pay between $6,000 and $12,000 in closing fees. Before closing, discuss the detail of these costs with your lender and find out if their willing to offer you a loan with lower fees at closing.


Closing costs vary and mostly depend on the type of property you buy, where you live, and the loan you choose. Below are a few fees most commonly included in closing costs.

Application Fees This fee is the cost for the lender to process your application. The fee typically covers services, like a credit check or appraisal. Before you submit your application, ask your lender what this fee includes and negotiate if possible.

Attorney Fees This fee covers the cost for an attorney to review the closing documents. The fee is not required in every state.

Credit Report Fees Lenders require a tri-merge credit report to approve your credit history and score. This fee covers the cost of pulling a credit report, which ultimately determines the interest rate you’ll pay on your loan.

Loan Origination Fees The origination fee covers the lender’s administrative costs and is typically about one percent of the loan amount. In some cases, lenders offer home loans with no origination fee.  

Underwriting Fee This fee covers your lenders underwriting costs, and the research process to approve you for the loan.

For more information about the home loan process and closing cost contact one of our Home Loan Experts today! Assurance Financial is dedicated to providing the assistance you need to receive your loan hassle-free.

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