How to Determine the Closing Cost of a House

When completing the mortgage application process the final chapter is going to be closing. At the closing table you have to be prepared with a certified check to pay for all fees required by the lender. You should have an idea of the estimated closing costs you'll have to pay well in advance of closing as well as a breakdown of the fees.

Instructions

1

Complete a mortgage application (Form 1003) with the mortgage lender of your choice. You must answer questions about your income, assets and expenses. Later, you'll also have to provide documentation to prove information listed on the application.

2

Submit your mortgage application and wait about three days. The mortgage lender is required to submit a GFE (Good Faith Estimate) within three days of the application. The Good Faith Estimate lists all of the estimated closing costs associated with the proposed loan.

3

Analyze your GFE paperwork to see the total and breakdown of each fee. Fees may include title search costs, appraisal and service fees, and loan financing costs due to the lender, like the origination fee and discount points. It also includes a listing of any prepaid interest, taxes and insurance that will be due at closing. Keep in mind that the GFE is an estimate---the actual costs may vary slightly. However, new rules enacted in January 2010 require lenders to provide a binding cost GFE. The lender may have to pay any significant cost increases that occur between the issuance of the GFE and closing.

4

Add in your down payment as required by the lender when estimating the total amount you have to bring to closing. Many lenders ask for a down payment of at least 20 percent of the price of the home.