Closing costs – confusing and disturbing

Closing costs are one of the most confusing and disturbing feature of home mortgages. Confusion arises out of the many different types of costs involved, which can vary from state to state and also from lender to lender.

(PRWEB) May 26, 2004 -- Once a loan has been approved, the borrower is asked to go for settlement to sign the final papers. Closing costs are the expenses paid by the borrower or the seller at the closing (http://www.mortgagefit.com/closing.html) of a new mortgage loan. These costs may include, but are not limited to, an origination fee (administrative cost of processing the loan), discount points (http://www.mortgagefit.com/discount-point.html) , appraisal, credit report, attorneys fees (paid to an attorney for preparing and reviewing all the documents needed to close the loan), survey, pre-paid items (like first year insurance premiums, real estate taxes or insurance escrow payments), loan fees, title fees (like title examination and title insurance), document preparation fees, recording and transfer charges (cost of paperwork to record the home on a file with the local government), garbage or trash collection fees.

The fees for services involved in closing a mortgage fall into three categories -- the actual cost of getting the loan, the fees involved in transferring ownership of the property, and the taxes paid to state and local governments. The lender charges it. It varies from state to state and county to county. These closing costs are in addition to the down payment (http://www.mortgagefit.com/down-payment.html) on the house. Generally it amounts to 3%-7% of the loan amount.

For example, if the mortgage loan is $900,000 the closing costs might range from $27,000 to $63,000.

The percentage depends on the region in which you buy/own, the loan amount, the type of mortgage you are applying for, the lender with which you are dealing and the time of the month you close.

The Real Estate Settlement Procedures Act (RESPA) (http://www.mortgagefit.com/respa.html) requires lenders to provide you with a good faith estimate of closing costs within three days of receiving your application.

Each fee has its place in the mortgage industry. You should not see the number of fees that you are charged with but your main concern should be total of all the fees charged by your lender as compared to other lenders in your area.

Financing closing costs does increase your mortgage amount, but many people find it much easier to pay a few dollars per month, than to come up with a couple thousand dollars at closing time.

External resources:
1. Know more about credit report-> http://www.mortgagefit.com/credit-report.html
2. Know more about escrow payment-> http://www.mortgagefit.com/escrow-payment.html
3. Document preparation-> http://www.mortgagefit.com/document-preparation.html
4. Origination fees-> http://www.mortgagefit.com/origination-fees.html
5. Title-> http://www.mortgagefit.com/title.html
6. Title insurance-> http://www.mortgagefit.com/title-insurance.html
7. Survey-> http://www.mortgagefit.com/survey.html