Various answers to the question “What are the closing costs?” exist. The easiest form I have found breaks down the costs into 4 categories. The current Federally mandated forms do not provide an accurate accounting. Here is my version:
Bucket # 1) Points. Points are a percentage of the loan amount. 1/2 point = 1/2 % of the loan amount. 1 point = 1 % of the loan amount
Bucket # 2) Fixed closing costs. Include but not limited to:
Lender costs: appraisal, credit report, underwriting, tax service, flood certification, MERS, processing.
Title costs: escrow fee, notary, document preparation, title insurance policies, endorsements.
Government costs: recording, transfer taxes.
Other: payoff demands, re conveyances
Bucket # 3) Pro-rated costs: Per diem interest, property insurance and taxes, home owners association and mortgage insurance.
Bucket # 4) IF impound accounts, the pre-funding requirement for property tax and property insurance accounts.
This breakdown will facilitate quick check for complete disclosure by banks and lenders. For your own protection, asking the right questions in a format YOU understand is your best protection.