The “closing” is the final step in obtaining a mortgage.  For the appraisal, credit assessment, public records updates, and legal document work there is a closing cost.   Just how much your closing cost may be will vary greatly.  As a rule however, the higher the price of the home the greater the cost will be.  Whatever your cost will be, you will be told before the loan is consummated.  Home loans are covered by the federal Truth-In-Lending Act, which requires that the lender make full disclosure to the borrower of all costs, fees or other charges growing out of the transaction before the loan is consummated.

 There are certain home ownership expenses that you may be asked to pay at the closing.  If applicable, these expenses are prorated on a settlement cost statement. A copy of which goes to the home seller.  The general rule is for the buyer to be responsible for these expenses beginning with the closing date.  This is done to protect the buyer.  However, these expenses are negotiable.

 Other expenses which the borrower may be asked to pay include:

 1.  Real Estate Taxes - Borrowers may be asked to pay one or more months taxes the escrow account.

2.  Utility Charges - In some communities borrowers may be assessed connection ortie-in fees by local utility companies.

3.  Hazard Insurance - Buyers taking out a new policy must make or show evidenceof a premium payment.  Also, you may be asked a percentage of that amount for  the escrow account.  The required coverage is minimal so you may wish toexpand this coverage to insure more of your own interest in the property, as wellas home content.  Otherwise, if damage to your home or a theft should occur, youcould suffer substantial losses.

4.  Loan Interest - A loan interest rate will be paid by the borrower each month.  Ifhowever, the loan is closed on a date other than the monthly payment date, thatmonth’s loan interest will be prorated between the borrower and the lendinginstitution.

 CLOSING CHECKLIST