What are closing costs?

I'm sure you've heard the term "Closing Costs” but what does that actually mean?

Closing costs, or more correctly "Loan Costs,” are the fees for services to set up your loan. Some of these costs are paid directly to the lender (example could be an underwriting fee and/or a processing fee) while others are paid to 3rd parties (examples of these are the appraisal, recording cost, lenders & buyers title insurance and the title closing fee). Sometimes people confuse the title closing fee as total closing cost, but this is only the fee for the title company to close the loan, not the full loan cost. We see this a lot when the buyer and seller agree to split the closing fee. In this case the seller is not agreeing to split total loan cost, just the title fee to close the loan. 

With a purchase it's always good to make sure you are 100% clear on what you are paying for and what the sellers are paying to avoid surprises. Finally, loan cost & fees vary from state to state as well as between loan types and mortgage lenders.

If you have other questions about the mortgage/home buying process, I have so much information to give you. Call or text me at 316-262-7766 to discuss.