Mortgage Closing Costs

Expenses incurred by the buyer and seller in a real estate or mortgage transaction. There are two types of costs : recurring and non recurring.

Non-recurring costs are one time transactional costs which include:

• Discount and origination fees
• Lender fees - underwriting, processing, document preparations, flood certificate, tax service, wire transfer, courier, etc.
• Title insurance fees
• Escrow, attorney or closing agent fees
• Recording fees
• Inspection and appraisal fees
• Real estate brokerage commissions

Recurring fees are costs associated with owning the property and they recur month after month. These costs may include hazard insurance, interest, property taxes, mortgage insurance (PMI), and association fees. A pro-rated amount of these fees may have to be paid at closing including:

• Pre-paid interest - interest charges from the date of closing to the end of the month
• Property taxes if due
• Hazard insurance, fire insurance or homeowner's insurance has to be paid for one year
• Mortgage insurance (PMI) - may be required if the loan amount is more than 80% of the value of the property. In the past a whole year of PMI had to be paid up front, however in recent years many PMI companies only require 1-2 months up front. Mortgage insurance premiums are normally paid every month with the loan payment
• Impound account may need money to be set up for future payments of taxes and insurance.