CLOSING COSTS are fees that are earned prior to closing but are payable at or prior to closing and Fees that are required to be paid at closing to complete the loan transaction.
These Fees are itemized and estimated for you on the Good-Faith-Estimate now know as Loan Estimate which is provided within three business days of the filing of your application.
Closing costs can be divided into two broad categories. First, there are Fees required by your lender and/or mortgage broker as a condition of closing your loan. These Fees may include an application fee, appraisal Fee, Credit reporting Fee, interim interest until the end of the month, mortgage broker points and lender points ( a point is one percent of the principal loan amount ). Tax and insurance
Further third party Fees include charges for hazard and flood insurance (if applicable), flood certification, private mortgage insurance (if applicable), termite inspection, well water and cesspool inspections (if applicable), legal fees payable to the lender’s settlement agent, and survey charges (if applicable).
If your loan provides for the lender to escrow funds for the payment of taxes and/or insurance, an amount necessary to fund the escrow account will be collected at closing, so that there will be sufficient funds available, when combined with the amounts collected as part of your monthly payments, to pay these charges as they become due.
Closing costs may be paid out of the loan proceeds or they may be paid separately by the borrower, usually by certified check. Certain loan programs allow the borrower to finance the closing costs by increasing the loan amount
The Loan estimate (Good-Faith-Estimate) will estimate each of the