What Do Closing Costs Include? – Closing Costs for First Time Buyer (Full Breakdown)

Buyers often have many questions about the process of purchasing a home, so this article is designed to answer the most important one. What are closing costs? They’re charges that go towards paying off your mortgage lender for the time that you used their money as well as various other services related to your loan. While they may seem like a burden at first, closing costs are an important part of the home-buying process and shouldn’t be ignored.

Knowing your closing costs and how to read the loan estimate will help you choose the best lender because you will be able to see which lender is charging you the lowest origination fees and giving you the best rate. Important pointer to keep in mind is that the overall closing costs are very standard on each transaction and where you can really save money is on lender origination fees.  Watch the video to get a better understanding and detailed explanation. 

The following are some of the  standard closing costs(full explanation in Video):

– Loan origination fee: This is a fee that the lender charges for creating your loan..

– Appraisal fee: This is what the lender pays to have an appraisal done of the home’s value.

– Credit report fee: The lender will pay for a credit report on you to make sure that you’re a good risk for lending.

– Flood certification fee: This is what the lender charges to verify that the property is in a flood zone and, if so, what the necessary insurance will cost.

– Tax service fee: This is a fee that the lender charges to make sure that all property taxes are paid up to date.

– Title insurance: This is insurance that protects the lender in case there are any problems with the title to the property.

– Recording fees: These are fees charged by the county for recording the deed and mortgage.

– Underwriting fee: This is a fee that the lender charges for processing your loan.

– Mortgage insurance premium: If you’re putting less than 20% down on the home, the lender will require you to have mortgage insurance. The premium is typically around 0.5% of the loan amount. 

– Courier fee: This is a fee that the lender charges to send all of your loan documents to and from the closing.

– Wire transfer fee: This is a fee that the lender charges to send your loan money to the closing.

– Notary fee: The notary will charge a fee for their services in witnessing the signing of all of the documents.

While it’s an exhaustive list, these are some of the more common closing costs. Keep in mind that every transaction is a little different, so yours may have a different mix of fees. But the overall purpose of the fees and the way they are shown on the loan estimate and closing disclosure are the same. If you’re not sure what something is, be sure to ask your lender. They will be able to explain it to you in detail. Now that you know what closing costs are, you can start planning for them. Good luck on your future transaction!!

Until next time.

About the Author
Karan Singh
My brand thrives on building meaningful relationships with clients, colleagues, and co-workers. Consider me your passionate ally in helping you and your family craft a future as solid as the foundation of your dream home.

For the past 8 incredible years, I’ve been on a mission to turn the elusive “”American Dream”” into a tangible reality for home buyers. Think of me as your guide, relentlessly searching for that perfect home at the perfect price. And for sellers, I’m the secret weapon to ensuring your property gets snatched up for top dollar, faster than you can say “”sold!””

But here’s the real kicker: I’m not just a lone wolf in this wild real estate jungle. I’m part of a dynamic team that knows no bounds when it comes to innovative and proactive marketing strategies. We’re not just top ranked in the market—we’re the ones setting the bar!

So, let’s cut to the chase. If you’re itching to unlock the door to your real estate goals, give me a call today. Trust me, you won’t be disappointed. It’s time to make moves, my friend!