Closing Costs

Closing costs are another thing that must be considered when deciding on a mortgage. Closing costs are fees that you have to pay when you receive your mortgage and complete buying your house. It is important to take these into account as it is money you need upfront together with the deposit for your house. You should make sure you have enough money saved to cover your closing costs as well as your deposit

Closing costs consist of a number of different fees. What fees are included and how much they are will cary from lender to lender and even between different loans. Your lender should give your an estimation of your closing costs during the loan application process.

Fees that may be part of your closing costs include loan origination fees, adminsitration fees, broker fees, plus a number of others. You may also have to pay property tax and homeowners insurance upfront as part of your closing costs too.

If you have chosen to buy points on your mortgage in order to reduce your interest rate, you will also pay these as part of your closing costs. Each point will cost 1% of your loan amount. For example, if you are borrowing $150,000, each point will add $1500 to your closing costs.

With the increased competition between mortgage providers, some loan companies are now offering loans with low closing costs. For example, ING DIRECT offers an adjustable rate mortgage with very low closing costs and no points.


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