Loanfactz Definitions

Closing Costs

Closing Costs are various fees and expenses (in addition to the price of the property) paid by the seller and buyer to complete the real estate transaction - the transfer of ownership of property from the seller to the buyer. Some closing costs include: loan origination fee, points, property taxes, title search and title insurance, credit report fee, appraisal fee, financing costs, brokerage commissions, items that must be prepaid or escrowed, interest from the closing date to the beginning of the 1st payment, hazard insurance premium, and mortgage insurance premium. Not all closing costs may apply to your transaction. Closing costs can vary, ranging between 2 and 10% of the sale price of the property. Ask the lender or the real estate agent for a complete list of closing cost items.

The Real Estate Settlement Procedures Act (RESPA) is a disclosure law, administered by the Department of Housing and Urban Development, which requires the lender to give you, in advance, certain information about the costs you will pay (closing costs) when you close the loan. The act also requires that lenders give you the booklet "Buying Your Home: Settlement Costs and Information" to help you understand the closing process and shop for lower settlement costs. To get the booklet, write to:

Deputy Assistant Secretary for Housing
Attention: RESPA Enforcement
U.S. Department of Housing and Urban Development
451 Seventh Street, S.W.
Room 9416
Washington, DC 20410

Or Call: 202-708-4560

The Federal Reserve pamphlet "A Consumer's Guide to Mortgage Closing Costs" also contains useful information.

References:
www.federalreserve.gov/pubs/consumerhdbk/cost.htm

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