Home Mortgage Loans

Information About Closing Costs

   
   
 

Mortgage closing costs can vary depending on the type of loan, the loan amount, credit scores, loan to value, and the lender. For example, as your loan amount increases, certain closing costs can increase, such as, title insurance, escrow fees, or origination fees, because they are based on the amount of the loan. Also, credit scores determine rates and points, as they are interchangeable. 

Recurring closing costs are costs that are ongoing, such as hazard insurance, mortgage insurance, or property taxes. These types of expenses are not associated with the lender, but may be collected by the lender to pay others.

A home equity loan or second mortgage does not require an impound account, and mortgage insurance is not required regardless of the loan to value. On a refinance loan, the lender may collect a pre-paid amount to establish an impound account for taxes and insurance.

Another item in this category is pre-paid interest, which is prorated based on the day of the month for closing, because your mortgage payment pays the interest from the previous month. 

Non-recurring closing costs are fees paid one time only to the lender or third parties involved in the loan transaction, which can include the following: loan processing, underwriting, loan documents, credit report, appraisal, tax service, flood certification, courier, loan origination, or points. 

Lenders are required to provide you with an estimated closing statement for your loan, which can even be requested before starting the loan process. When comparing mortgage quotes, the points, if there are any, should be quoted separately from the other costs to simplify your comparison.