The estimated closing costs appear in 2 places on the Loan Estimate:
The total closing costs are summarized in the “Costs at Closing” section at the bottom of Page 1.
Detailed, itemized closing costs take up most of Page 2 in the “Loan Costs” and “Other Costs” sections.
The “Loan Costs” section lists the fees associated with getting the mortgage. These fees include:
- Origination charges levied directly by the lender. They may include charges such as points, underwriting or origination fee and tax service fee.
- Third-party services that you cannot shop for because the lender chooses the service provider. These services may include the appraisal, credit report, flood certification, flood monitoring, tax monitoring, tax status research and others.
- Third-party services that you can shop for. These services may include the survey, pest inspection, title search, title insurance and title agent or escrow agent.
The dollar figures in the Loan Estimate are supposed to be accurate, but lenders have leeway to underestimate some fees, while other fees have to be exactly on the money. For details, read “How accurate is this estimate?“
While the “Loan Costs” section lists fees for getting the loan, the “Other Costs” section lists fees that, for the most part, have to do with buying or owning the home itself. These fees may include:
- Taxes and other government fees.
- Prepaid items. These are charges that are paid immediately to the recipients, such as the 1st payments for homeowners insurance, mortgage insurance and property taxes, plus several days’ worth of mortgage interest.
- Escrow payments. These charges are deposited into your mortgage’s escrow account for payment of future bills for homeowners insurance and property taxes.
- Other items, such as an optional owner’s title insurance policy.
The total closing costs equal the total of all the above. But the closing costs do not equal “cash to close,” or the amount of money that the borrower will have to take to the closing table.
For more, read “What to expect when you’re closing.”
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