Charlie Glahe WIN Broomfield

What you need to know about closing costs


The costs of buying a home are not limited to what you pay for the house itself.

There are many additional expenses, including home loan fees, moving costs and even the price of a comprehensive home inspection. Expenses such as these and others make up what are known as closing costs.

What are they? 
Before you can finalize the purchase of your new home, you need to sign several documents and arrange for the payment of certain fees when you meet with your real estate agent at the closing table. Depending on how you negotiated the price with the seller, the closing costs may be included in your sale price or the seller could be responsible for these payments. If you have a mortgage from the U.S. Veterans Administration, the seller is required to pay some of these fees. If not, then you have to shoulder the costs.

Here's a list of some fees that fall under closing costs:

  • Attorney's fee
  • Appraisal fee
  • Credit check fee
  • Survey fee
  • Owner's title insurance premium
  • Lender's title insurance premium
  • Title search fee
  • Pest inspection fee
  • Government recordation fee
  • Loan application fee

How much are closing costs?
The price of closing costs varies by location and can range from 2 percent to 5 percent of the loan amount. Although you won't have a clear idea how much these expenses will be, your lender is required by law to give you a good-faith estimate within three days after you apply for your mortgage. Keep in mind, however, that this is only an estimate, and the price for each fee can increase at the actual time of closing, potentially leading to thousands of dollars in additional costs.

Within a day of your closing, your lender will give you a HUD-1 settlement statement, which provides a breakdown of your closing costs. Be sure to compare this document with your GFE and note the differences between the two. If you see fees that appear exorbitant or unnecessary, you can negotiate with your lender to eliminate or at least lower some of them. You have the option to walk away if the actual closing costs are too high, but be sure to consider how this can interrupt your home purchase.

Speaking with more than one lender and comparing GFEs prior to closing can help you approach the situation with more confidence.