What are mortgage closing costs?

The down payment may be one of the highest initial costs you'll face when buying ahome, but it's not the only one. It also incurs closing costs. This is the cost associated with initiating, recording, and closing a mortgage. 

Preparation is key because you will need to pay both these and the down payment before you can finalize your mortgage and receive the keys to your new home. Closing costs can affect how much home you can afford, so it's important to know what to expect

exactly what it costs. can be predicted and how it can be calculated.

What are mortgage closing costs?

Closing costs are made up of a variety of separate fees, including lender fees, title costs, and escrow fees. 

Examples of Mortgage Closing Costs:

• Lender Fees: These are the fees paid on a mortgage. Lenders and others involved in the mortgage process. This includes origination fees, points, underwriting fees, the cost of preparing a borrower's credit report, assessment fees, and more.
• Title and Settlement Fees: These are costs payable to the title company and others involved in making the loan. Examples of these include title insurance premiums, title search fees, and recording fees that cover the cost of recording transactions with the county.
• Prepaid Items and Escrow Fees: These are prepaid items such as homeowners insurance, mortgage insurance, and property taxes. The funds are put into an escrow account that the mortgage company uses to pay these bills annually. You also need to prepay a portion of themortgage interest. This covers the period from the completion of the loan to the first mortgage payment. 

Usually the buyer pays all or most of the closing costs. However, there are some scenarios in which sellers intervene.Consider your options now. 

What are the closing costs?

Closing costs (excluding prepayment or escrow costs) average about $7,000 nationwide for single-family properties, according toclosing platform, according to closing platform ClosingCorp.Note that these costs vary widely by lender and location. For example, in Washington, D.C., the average closing cost is about $30,000.

Reviewing the loan quotes provided by your mortgage lender is the best way to determine what you will need to pay in terms of closing costs. They detail all the fees and costs associated with a mortgage and are a good place to compare quotes from different companies. 

Closing costs may increase between receiving a loan quote and completing the loan, but only in certain circumstances. Many increases are capped at 10%, per consumer. Financial Protection Bureau (CFPBHowever, costs not controlled by the lender -  such as prepaid insurance and third party fees - could increase even further.

In any case, the increasemust be provided by the mortgage lender at least three business days prior to your closing appointment.

Lower closing costs How to (or Avoid)

Closing costs are unavoidable when buying a home, but they can be reduced in several ways.

• Do some research: Look for a mortgage lender or third-party service provider p for" section on page 2 of Loan QuoteThese are third party vendors you can shop with. Lenders provide loan quotes. This can be used to compare closing costs to lender fees.
• Consult your real estate agent: Some markets require the seller to pay a portion of the closing costs. 

If you are considering asking the seller for a donation, check with your mortgage lender first as some lending programs may have restrictions. There are