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CHAPTER XII -- YOU'VE MADE IT! CLOSING DAY

LESSON 22: CLOSING COSTS REVIEW

We've talked a lot about the closing process and all of the things lenders have to do after approving an application. But how much does all of this stuff cost? It depends on a number of factors.

Cost

In most cases, closing costs will total about 3 percent to 5 percent of your loan amount.

You may have paid an application fee at the beginning of the whole loan process. These fees run anywhere from $25 to $50 if they're just for pulling credit reports on up to $250 or $300 if they include the property appraisal. In many cases, home buyers will already have put down a portion of the down payment as an earnest deposit, too. But the remainder of the closing costs will be paid (surprise, surprise) at closing.

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FOUR MAIN CATEGORIES OF FEES:
1) Lender fees
These include charges for document preparation, underwriting and origination.
2) Third-party fees
These include charges for title searches, flood certifications and appraisals.
3) Government fees
These iclude fees for recording the mortgage and other state and local mortgage taxes.
4) Escrow/Interest fees
These include advance payments into an escrow account for homeowners insurance, real estate taxes and loan interest.
See Tip 1

 

Homeowners' insurance policies can either be "replacement cost'' or "actual cash value.''
With replacement cost, a 20-year-old camera destroyed in a storm will be replaced with an equivalent new model, while cash value coverage would leave a homeowner with nothing because the item has lost its value over time.

Owners of newer houses and furniture should consider cash value policies, while owners with older dwellings and contents may benefit more from replacement-cost versions, which are generally 10 percent more expensive.

(continued on next page)

 

TABLE OF CONTENTS

CHAPTER I
  Lesson 1
  Quiz

CHAPTER II
  Lesson 2
  Quiz

CHAPTER III
  Lesson 3
  Lesson 4
  Lesson 5
  Quiz

CHAPTER IV
  Lesson 6
  Lesson 7
  Quiz

CHAPTER V
  Lesson 8
  Lesson 9
  Quiz

CHAPTER VI
  Lesson 10
  Lesson 11
  Quiz

CHAPTER VII
  Lesson 12
  Lesson 13
  Lesson 14
  Quiz

CHAPTER VIII
  Lesson 15
  Lesson 16
  Lesson 17
  Lesson 18
  Quiz

CHAPTER IX
  Lesson 19
  Quiz

CHAPTER X
  Lesson 20
  Quiz

CHAPTER XI
  Lesson 21
  Quiz

CHAPTER XII
  Lesson 22
  Lesson 23
  Lesson 24
  Quiz

CHAPTER XIII
  Lesson 25
  Lesson 26
  Lesson 27
  Quiz

CHAPTER XIV
  Lesson 28
  Lesson 29
  Lesson 30
  Quiz

Definitions




RELATED STORIES

High-cost, high-fee predatory loans.

 
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