What are the closing costs and what is an estimate of how much that I should allow for them?
• The entire closing process is a very common transparent and regulated transaction. You will be given good faith estimates of your fees when you go to obtain a mortgage which approximate the total cost of the closing. However, the final cost of the closing depends upon how much escrows are taken by the bank for taxes (which can be up to 5 months), how much the bank wants for interest on the day of closing until the end of the month. Since mortgages are paid a month behind you need to pay interest only on the amount borrowed on the day of closing until the end of month, with the first payment being due at the beginning of the next month. Title work and title searches are fees that are regulated by law but range from $1500-$3500, filing fees to file the original mortgage and note are usually around $450-$650, depending on whether or not a second mortgage is taken. Generally speaking, a closing of $300,000 will cost about (out of pocket) $5,000 – $6,000; a closing of $500,000 will be $7,
