Home Mortgage Financing - Closing Costs Information

Closing Costs

When you meet with a lender, they usually prepare a "Good Faith Estimate" of what your closing costs will be. Because the lender is the one who actually prepares the estimate, many buyers assume that all the closing costs originate from the lender. This simply is not the case.

The lender is merely preparing an estimate of the costs thath you may face when buying or refinancing and is not required to list all of the potential costs that you may incur. The estimate that they prepare for you is an educated guess based on past experience. Some things will most likely get left out. You should always anticipate that the actual costs are going to be more than the estimate.

In general there are two broad categories of closing costs. The first category is called "non-recurring". Non-recurring closing costs are items that are paid once and that you never have to pay again. The second category is called "recurring". Recurring closing costs are items that you pay over and over throughout the course of home ownership. Example recurring costs are property taxes and homeowner’s insurance. Some of the items that appear here do not traditionally appear on a lender's Good Faith Estimate and lenders are not required to show all of these items.