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What Are Closing Costs?

What are closing costs?

That is a question most first-time home buyers ask. Many repeat buyers do, too.

Many home buyers do not realize the kind of costs that can be associated with a mortgage. Whether a buyer selects a no closing cost mortgage or a more traditional mortgage option, all mortgages have the same closing costs. Many of these costs are for legal requirements.

So, what are the closing costs associated with a mortgage?

Appraisal of the Property

A State Licensed Appraiser is required to examine the property being used as the collateral for the loan. They evaluate market conditions based solely on other properties that have sold with similar features, in similar neighborhoods near the subject. In a rapidly increasing market, appraised values can be on the low side because they are based on prior sales.

Title Insurance

Title insurance covers that there is what is known as “clear” Title at the time of purchase. Over time properties titles can become clouded by different liens that can be placed on them for a verity of reasons. Things like unpaid water bills, contractors or taxes can cloud a property title and without the title search and title insurance, those debts could become the responsibility of the new owner.

Processing & Underwriting Fees

Processing fees can include the purchasing of all the information for the underwriter to review. Some of the verifications include compliance review, Flood verification, and life of loan guarantee, Property verifications with the city, Tax transcripts, Submission to Fannie or Freddie. The underwriter validates all the information associated with the loan and makes the decision on loan approval.

Real Estate Brokerage

Fees paid to the real estate professionals representing the buyer and seller.

Origination Fees

Will vary depending on the loan program, this fee is to cover all the other costs associated with providing the loan. Origination fees are normally expressed as a percentage of the total loan amount.

Get Started Today

For more great information about the mortgage process contact your Local Mortgage 1-Jackson Office at 517-315-4626 or


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