Q & A: Escrow & Closing Costs

Click a question to jump right to the answer:

  1. How can I save on closing costs?
  2. What are closing costs?
  3. Who pays the closing costs?

How can I save on closing costs?

Closing costs are often higher than buyers expect, and therefore can be a cause of financial stress during the home buying process. Prior to placing an offer on a home, get a good faith estimate from your lender that details the closing cost fees you can expect to pay. Factor closing costs, your down payment, as well as any other initial services or fees you may incur into your overall budget. Closings costs can be lowered by choosing a low or no-point loan, but remember that in return your monthly interest rate will be higher. Another option is to ask for the seller to pay the buyer’s closing fees, or a portion of them.

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What are closing costs?

Closing costs are the transaction fees charged by a lender during the purchase of a home. Generally closing costs cover items such as origination fees, title fees, appraisals, discount points, underwriting, etc. When searching for a lender, always ask for a Good Faith Estimate (GFE). A GFE allows you to see all of the lender’s estimated costs for closing prior to committing to the lender.

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Who pays the closing costs?

Closing costs are either paid by the buyer, seller, or a combination of the two. Each state has different closing regulations; speak with your real estate agent for policies in your area.

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