I get asked frequently about the closing costs associated with getting a new mortgage. Many people think that when the closing fee is marked in the contract as one half paid by seller and one half by buyer, that this refers to the closing costs. A closing fee is the amount charged by the title company to present the closing documents and distribute the funds, this fee is approximately $450. The closing costs, on the other hand, are the costs associated with obtaining a new loan, ordering an appraisal and credit report, obtaining title insurance, paying upfront taxes and homeowners insurance, and a few select other items. The closing costs are typically about 2% of the loan amount. As you can see, there is a HUGE difference between the closing fee and the closing costs. It is important that you have a clear understanding of this when making an offer so that no one is surprised in the end.
If you’ve been following the real estate market at all, you’ve probably picked up on the fact that property values have been