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Closing Cost:
Barbara J. Beck /


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Closing costs are simply the fees associated with 1) purchasing a home, 2) borrowing money, and 3)
preparing paperwork to finalize the sale. Your total closing costs will vary depending on where your new
home is located, what type of property you are buying, the price of your home and the complexity of the

It is extremely important that you work closely with your buyer’s representative in the early stages of your
home search to estimate what these costs could be, since closing costs can easily represent thousands of

The main categories are:

Discount points to buy down the mortgage

If you want to reduce the ongoing cost of your mortgage over the life of the loan, you’ll want to consider this
optional fee. Amounts can vary significantly, from 0.5 to 3 points on the total mortgage amount. This is a one-
time charge that is fully deductible as mortgage interest.

Costs for originating the mortgage

This generally includes a variety of fees such as the loan origination fee, the appraisal fee and the cost of
credit reports. Other related closing fees may include hazard and mortgage insurance, and interest accrued
on the mortgage between closing date and the end of the month.

Taxes and other local fees

Charges will vary according to local government requirements. Some may demand that property taxes be
pro-rated according to when you officially own your home. You may also be required to pay personal property
taxes, homeowner’s association dues, and other assessments that are specific to the area that you are
moving into.

Documentation costs

You will have to pay for any research involving public records and title history for your new property. This
insures that the title is unencumbered by other ownership claims or liens and can be delivered to you at
closing. Other costs include recording and transfer fees, which cover legally recording the deed to your name.