What is Included in Mortgage Closing Costs?

Closing costs include both property-related fees (associated with verifying the home’s value) and mortgage-related fees (associated with preparing the mortgage). Some common property- and mortgage-related fees include:

• Appraisal fee: This covers the work a licensed appraiser does to determine the value of the home. This fee is often paid before closing day.
• Home inspection fee: This fee goes to the home inspector, who evaluates the home to identify any problems. This fee is also usually paid before closing day.
• Title insurance: Borrowers are required to obtain title insurance in case there are issues with ownership after the sale of the home. Title insurance can protect the lender or the borrower.
• Application fee: Some lenders charge a fee to process your loan application.
• Origination fee: This is a fee charged by the lender for creating the loan. The cost is typically 0.5 – 1% of the amount you borrow.
• Underwriting fee: This fee—sometimes called an administrative or processing fee—covers the cost of verifying your loan qualifications and eligibility.