Mortgage closing cost is the payment made when the homebuyer and the seller meet to exchange the necessary papers for the house to be legally transferred. On an average, the closing cost on mortgage loan is about 2% to 3% of the house price. Closing costs varies from state to state, market to market and even from lender to lender, so it is tough for the consumer to figure out whether the estimate from the lender is true or fake.
Mortgage loan closing costs can be broadly classified into two basic groups:
* Amount paid to state and local government. This includes city, country and state transfer taxes, recordation fees, and prepaid property taxes.
* Cost of getting a mortgage. This includes title insurance, survey, appraisals, credit checks, loan origination and documentation fees, commitment and processing fees, hazard and mortgage insurance and interest prepayments.
