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The Closing Process

Understanding closing costs

Buyer’s closing costs can usually be classified as loan-related, escrow-related (including government fees) or prepaid items (such as property taxes, interest and insurance).  Your expenses will almost always fall into one of these three categories. 

As a result of negotiations between buyer and seller, the seller may pay for some of these charges at the time of closing.  Make sure any agreement regarding exactly who will pay for what (and in what amount) is specified in the sales contract.

Mortgage-related closing costs can vary, but the following are commonly paid at closing, if not paid by the buyer earlier in the process (such as appraisal fee):

• loan origination fee
• loan discount points
• appraisal fee
• credit report fee
• prepaid interest
• escrow accounts
• mortgage insurance