Chapter 9: Closing Costs, Line by Line

Chapter 9: Closing Costs, Line by Line

A Scene from Real Life

A family calculated everything. Three days before closing, the Closing Disclosure arrived: $14,000 in cash needed above the down payment! They almost lost the house for not budgeting closing costs.

What Are Closing Costs?

All fees to transfer ownership and complete the loan. Typically 2% to 5% of the home price. On $320,000: $6,400 to $16,000.

The Breakdown

Lender fees: origination (0.5-1%), appraisal ($300-600), points. Prepaids: prepaid interest, first-year insurance in full ($1,200-2,500), advance taxes. Title: title insurance ($1,000-2,000), title search, settlement fee.

Junk Fees to Challenge

Question every fee: “Is this negotiable? Another lender offered lower fees.” Lenders concede more than you think.

The Closing Disclosure

Standardized 5-page form, by law at least 3 business days before closing. Compare it line by line to the original Loan Estimate.

Action Steps

• Get Loan Estimates from 3 lenders; compare total costs.
• Budget 3% of target price as a first estimate.
• Challenge every fee you don’t understand.
• Use your 3 legal days — don’t sign blind.

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