Mortgage and Real Estate Blog


What are home mortgage loan closing costs?

All home mortgage loans have fees knows as closing costs, which are required to process and obtain your home loan.

People involved include the lender, title companies, appraisers, credit bureau, county document recording fees, and even state mortgage deed taxes.

You also need to buy you first years home owners insurance, and pay pro-rated property taxes based on when taxes are due, how much they are, and what month you buy the home.

All of these closing costs can really add up, and are in ADDITION to your down payment.  Your Loan Officer can give you a breakdown of what all these costs will add up to when you apply for your home loan.


There are 4 basic ways to pay your loans closing costs:

  1. Pay cash out-of-pocket at closing
  2. Get a downpayment and closing cost assistance loan
  3. Roll the closing costs into the loan amount - This is commonly known as "Seller Paid Closing Costs"
  4. Roll the closing costs into your loan by taking a slightly higher interest rate (not available on all loans). Some lenders pretend their closing costs are much cheaper than someone else, but this option is what they are actually quoting you.
  5. A combination of any or all of these options

Paying your loans closing costs out-of-pocket is always best in the long-term, but simply not realistic for most first time home buyers. Between all the other options to pay closing costs, most people are able to buy a home with ONLY needing their down payment.


Some fees and closing costs are required up-front by your mortgage company when buying a home.  The two most common items are:

  1. Paying for a credit report at time of application. This runs between $10.00 to $20.00
  2. Paying for the appraisal once your offer to buy a home is accepted. This runs between $375 to $500


Of cost there is your down payment.  Your Loan Officer will discuss how much you will need after reviewing your full loan application, and determining what mortgage program you qualify for, how much the house is you are buying, and if you are using any downpayment assistance programs.

You don't need to break the piggy bank, but you can not buy a home with nothing up-front.

There are two up-front costs many people don't understand you need when buying a home.

The first is earnest money. This is required by the seller as good faith money when you make your offer to buy.

It can vary, so talk to your Real Estate Agent, but at least $1,000 is very common for the average purchase here in Minnesota.  The earnest money gets credited towards your down payment and closing costs.

The idea is if your offer is accepted, but then later you decide not to buy the home, they keep your earnest money for wasting the sellers time.  So be sure you are serious when making an offer to buy a home.

The second is a Home Inspection. After your offer to buy the home is accepted, it is very common, and very smart to get an inspection on the home to make sure there are no hidden surprises.  Talk to your Real Estate Agent to set up a home inspection.  Home inspections generally run around $300 - $400.


Talk to your Loan Officer about getting a full breakdown of how much money you will need out-of-pocket to buy your new home.

This detailed breakdown will show you everything you need to know, and the final amount of money needed at the actual closing.

It is show your down payment, and all your closing costs. Then it will show you any credits to these costs, including seller paid closing costs, lender credits for interest rate, and any items you have already paid, like credit reports, appraisal, and earnest money.

Before you have the exact house, you will get an initial fees worksheet - or a close estimate based on the ballpark price of the homes you are looking at. 

Once you actually buy a house, and we know the exact address, exact purchase price, etc., you will receive a Good Faith Estimate, which while still an estimate, will be incredibly close to the exact penny you will need to finalize your home purchase.

As always, feel free to contact our first time home buyer expert Loan officers at (651) 552-3681 with ANY question whatsoever.  For more accurate service, complete the online loan application first.

0 commentsJoseph Metzler • September 03 2014 08:08AM
What are home mortgage loan closing costs?
All home mortgage loans have fees knows as closing costs, which are required to process and obtain your home loan. People involved include the lender, title companies, appraisers, credit bureau, county document recording fees, and even state… more
Is Your FICO Credit Score About To Go Up?
Fair Issac and Company, the creator of one of the most widely used credit scoring models, FICO, said that the latest version of its score would no longer weigh medical debts This is major, as medical debt accounts for about half of all unpaid… more
Share of homes bought by first time homebuyer up
According to a recent survey, first time homebuyers share of real estate purchases accounted for 37. 2% of all homes bought in July 2014, based on a 3 month average. This is the highest level since January 2011, and up from 36. 2% of the market… more
Waiting period rules after short sale, bankruptcy, or foreclosure
Minneapolis, MN : As a mortgage Loan Officer, it seems I am asked what the rules are for getting a new mortgage loan after having a bankrutcy, foreclosure, or short sale about 100 times a week. Therefore I have made, and update as needed, a… more
Worst High Priced Mortgage Companies and Why
Worst high priced mortgage lenders, and why Here is a basic list of some of the worst mortgage company choices, and why: YOUR BANK Your bank is generally a poor mortgage company choice because they understand that you believe they are your… more
Less foreclosures - Lowest level since 2006
Foreclosure activity down in June 2014 Foreclosure activity in June dropped to its lowest level nationwide since before the housing bubble started to burst nearly eight years ago, a new report said Thursday. The number of homes facing bank… more
Mortgage rates slighly lower this past week
Minneapolis, MN: Freddie Mac today released the results of its Primary Mortgage Market Survey(R) (PMMS® ), showing average fixed mortgage rates moving down slightly to remain near historic lows for the week ending July 17, 2014 Mortgage Rate… more
Top credit report move that will wreck your mortgage approval
Top credit report move that will wreck your mortgage approval Getting a mortgage loan these days is overly complicated, and annoyingly paperwork intensive. This is simply a response to the market collapse that started a few years ago, when it… more
Know the difference of mortgage pre-qualify versus pre-approval
Mortgage Pre-Qualification versus Mortgage Pre-Approval Getting an initial Mortgage Pre-Approval BEFORE you speak with a Real Estate Agent just makes sense. A good first step is to complete the online application or speak with a Mortgages… more
Tips to Improve Your Mortgage Approval and Credit Score
Tips to Improve Your Mortgage Approval and Credit Score Minneapolis, MN: When you are looking to purchase a home or refinance your exiting home your credit score is very important. One of the first things your lender will do is check your… more