As you decide how much house you can afford, you probably consider the list price, what you’ve saved for a down payment, and the resulting monthly mortgage.

Don’t forget other associated costs like homeowner’s insurance and HOA fees. And there’s still one more piece to the puzzle—closing costs.

Closing is the process of transferring homeownership from the seller to the buyer. The most time-consuming portion is reading through and signing seemingly endless piles of paperwork. Your down payment is also due on closing day, along with various closing costs. Rather than handing over thousands of dollars without really knowing what you’re paying for, learn what mortgage-related and government-imposed fees you’ll likely owe when closing on a house.

1. The home appraisal fee covers the cost of appraising the seller’s property. You may have paid this fee when you started the loan application process, or it may be due at closing.
2. The credit report fee covers the cost for your lender to pull your credit report. You may have paid this fee when you applied for a mortgage.
3. The loan origination fee covers the lender’s costs to process your loan. This typically comes to 1 percent of the total mortgage.
4. Mortgage points are optional fees you pay the lender in exchange for a reduced interest rate. Each point you purchase lowers your rate by 1 percent.
5. Title insurance fees cover the title search and examination, title insurance, document prep, and other associated title fees.
6. The first private mortgage insurance (PMI) premium is due at closing if you put down less than 20 percent on the house. Once you build up 20 percent equity in your home, you can apply to eliminate monthly PMI payments.
7. The prepaid interest fee covers the loan interest from the date you purchase your home to the date you make your first mortgage payment.
8. Escrow accounts make it easy for your lender to ensure you pay your homeowners insurance premiums and property taxeson time. If you agree to open these accounts with your lender, you will fund them with future payments at closing.
9. Recording fees and transfer taxes are charged by the state to cover the cost of recording purchase documents and transferring ownership.

Before closing day arrives, consult with a real estate professional about what fees—and the total amount of money—you’ll owe before moving into your dream home. Also, remember that an experienced real estate agent can help you negotiate these costs with the seller. In some cases, the seller may agree to pay all the closing costs!

To begin your house-hunting journey, reach out to Vutech | Ruff, Corcoran Global Living. Our featured properties are located in some of the most premier and well-established neighborhoods in the Columbus, OH, area. We also provide valuable resources for homebuyers and sellers alike, with years of experience negotiating closing costs. Contact us online or call 614-897-0618 today for more information.