Deciding to buy a home, apply for a mortgage, and close the purchase can be a daunting process and usually results in lots of questions. One question we hear often is how much will it cost to close my loan or how much money do I need to bring to closing?

There are a few factors that will determine how much you will need to bring to closing. Your loan officer will provide you ahead of time with an estimate of your closing costs and we do our best to overestimate those figures a little so we can avoid any big surprises at closing. The costs of closing your loan consist of the following:

1. Down Payment – Your down payment, as agreed to by you, the seller and the lender will be due and payable at the closing. This amount usually varies between 0% and 20%.

2. Pre-paids – You will also need to pre-pay insurance and taxes at closing. These requirements typically include one year of insurance paid with evidence of three months in reserve for insurance. You will also need three months of reserve in taxes.

You as the buyer will choose your own insurance company and you can get a quote for insurance from them. Taxes and insurance must be paid in the house note unless you will be paying a 20% or more down payment and are getting a conventional loan (Fannie Mae or Freddie Mac).

3. Other Closing Costs – Believe it or not, there are over 10 companies that are typically involved in closing a real estate purchase transaction, and they all have fees that you will need to pay at the closing. As mentioned above, we estimate these fees for you so that you know basically what you will be responsible for paying at closing. These fees include: appraisal, survey (if needed), tax certifications, underwriting, wire fees, title fees, recording fees, RMCR credit fees, closing attorney, and closing documents attorney (the attorney that draws your closing docs).

Please feel free to ask us to explain any fees or costs associated with closing your loan. We’re happy to answer any questions and want you to fully understand everything involved in completing your home purchase or refinance.