Buyers Guide to Closing Costs

Origination Fee - Payment to lender to evaluate your credit and underwrite and process loan.

Discount Points - Paid to lender at closing to reduce interest rate over life of the mortgage.

PMI or Mortgage Insurance - Required if down payment is less than 20%. Protects lender if you default.

Appraisal Fee - Paid to appraiser to confirm home's fair market value.

Title Search - Covers cost to confirm seller owns the property and it is free from liens.

Title Insurance - Protects lender and (optionally) you if title claim resurfaces later.

Termite Inspection Fee - Inspection required to certify home is free of termite damage. 

Survey Fee - Charge to verify property boundaries. 

Closing or Settlement Fee - Paid to title company, attorney, or escrow company that conducts closing.

Recording Fee - Paid to state to record transfer of property from one owner to another.

Transfer Tax - Paid to state based on the amount of the mortgage.

Prepaid Interest - Covers interest due between closing and first mortgage payment due.

Prorated Property Tax - Covers property taxes from date of closing to end of tax year.

Homeowners' Insurance - Typically you will pay first year up front at closing.

Homeowners' Association Transfer Fee - Paid on properties governed by associations to transfer ownership documents to you.

Initial Escrow - Lender may require first two months of next year's homeowners' insurance, flood insurance, and property taxes to build up reserve.