Why Are There So Many Mortgage Closing Costs

Basics

Your mortgage closing costs usually includes:

• commissions
• lender fees
• title and escrow fees
• government fees
• miscellaneous fees

The transfer of property from one person to another is a transaction that needs to be recorded for public purposes. It is usually the largest financial transaction a person makes.

There are many different parties that make this happen, which is why there are so many closing costs.

Closing Cost Types

Your closing costs may include commissions that are paid out as part of the sale of the property. This may include realtor commissions and mortgage commissions. These are usually a percentage of the property’s value. They can be from several thousand dollars to tens of thousands of dollars.

Lender fees are charges a lender will pass along to the borrower. This includes the cost of underwriting the loan, producing the loan documents, and wiring around their money.

Title and escrow fees are the fees paid out to neutral third parties that handle the transaction. Title fees are to make sure the title of the property is properly covered as part of the transaction. Escrow fees are the costs of having escrow perform all the recordkeeping, signing, and filing a home purchase may require.

Government fees are usually the cost of filing updated property ownership records. The transfer of ownership in the property is usually a matter of public record.

Miscellaneous fees may include notary fees, courier fees, and other smaller fees.