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Closing Costs
Closing costs are the expenses associated with buying real estate. You can expect to pay a majority of your closing costs the day the transaction is complete, when the property becomes yours, but some closing expenses are nearly always paid in advance.

HUD-1 Settlement Statement
There's no single set of expenses that every home buyer must pay, every transaction is different, but it's a good idea to become familiar with typical expenses and closing costs so that you'll have a better understanding of the items billed to you on your HUD-1 settlement statement.

The HUD-1 is a form used by the settlement agent, also called the closing agent, to itemize all charges imposed upon the borrower and seller in a real estate transaction. It gives each party a complete list of their incoming and outgoing funds. Fees associated with the transaction but paid prior to closing are also included on the

HUD-1.

Even though your down payment might be a high percentage of the funds you bring to closing it is not regarded as a closing cost. It's a payment that increases the equity in your home, not an expense.

Typical Closing Costs:

Document Preparation Fee
Lenders fee for processing the mortgage paperwork.

Down Payment
The percentage of the purchase price paid up front and not financed by a loan.

Escrow Fees
Paid to the lender for real estate taxes, homeowner's insurance premiums for 2 or 3 months, and private mortgage insurance if applicable.

Flood Certification Fee
Paid to the lender for verifying that the purchase complies with local flood zones.

Home Inspection Fee
Paid to an inspector for the review of the property. The inspection is usually done within a few days of signing the purchase agreement.

Home Owners (Hazard) Insurance
Must cover the total amount of the mortgage declaring the lender as the payee.

Legal Fees
Covers local and state processing fees, as well as the processing of various other documents and miscellaneous fees.

Loan Application Fee
Paid to the lender at the time the mortgage application is submitted.

Points (or Discount Points)
Paid to the lender at the time of closing in order to reduce the interest rate. One point equals 1% of the original loan amount. The interest rate is generally reduced by 1/8th % for each point paid.

Private Mortgage Insurance
If the down payment is less than 20% you may need to obtain private mortgage insurance.

Recording Fees
State or local fee for recording the purchase transaction.

State, County, City, and Village Real Estate Tax Stamps
Paid at the time the title is transferred from seller to buyer.

Title Search Fee
Covers the review of the title for liens or other problems.

Title Insurance
Protects the buyer and lender from any future title claims against the property.

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