The Closing

The closing generally is where the real estate transaction is completed. As a buyer, you will typically sign many papers at the closing. The closing agent at the title company should be able to answer any questions you have about the documents that you are signing. However, it is wise to request a copy of the closing documents prior to the closing appointment, so you can carefully read what you are signing and log any questions you may have about the documents. You will also receive a settlement statement itemizing all of the expenses in the transaction. In accordance with Regulation Z (Truth in Lending), you will also receive a disclosure statement informing you of exactly how much you will be paying over the life of the loan.

 You will typically need to bring a cashier's check to the closing to cover pre-paids and closing costs. You should be able to obtain this estimated total from the title company a day or two before the closing. However, you should also bring your checkbook to the closing in the event that the total due at closing is different than the estimate. This sometimes happens but is typically not very much of a difference.

Some of the items you may find on a closing statement:

• Loan Origination -- Optional fee equal to one percent of loan.
• Discount Point -- Optional fee equal to one percent of loan.
• Appraisal Fee -- Varies, but is usually around $300 or a little more.
• Credit Report -- Cost to lender to obtain your official credit report -- Varies, but typically approximately $50.
• Attorney's Fee -- Cost to have attorney look over documents and verify accuracy. Varies.
• Title Insurance -- Insurance to protect lender or purchaser. Varies based on price of home.
• City/County Tax Stamps -- Fees set by city/county and usually based on percentage of loan or sales price.
• Survey -- Verification that there are no encroachments on the property. Varies.
• Reserves and Pre-paids -- Prepayments or reserves of interest, taxes, and insurance.

There may be many other fees depending on the type of loan and the percentage loan you are receiving. Typically, as a VERY GENERAL rule of thumb on a 95% conventional loan, prepare for prepaids and closing costs to be between three to five percent of the sales price. This means that you would typically add three to five percent of the cost to the remainder of your down payment (You have probably already paid a portion of the down payment as earnest money.) to arrive at the amount of money you should bring to the closing. Again, this is a very general idea of a specific type and percentage loan, just to give you a very rough idea of what to expect. VA and FHA loans will be quite different! Talk to a lender to get a more accurate picture of what your closing costs may be.