Closing Costs Explained - Tutorial

My name is Aubrey Clark, I am a 15 year veteran in the mortgage; field first as an originator then manager and eventually a company owner. I have been writing about mortgages since 1999 as part of an effort to demystify the mortgage process and help consumers get fair deals on their mortgages. I hope this tutorial helps, enjoy.

Closing costs represent fees charged by the lender to close a mortgage for refinancing or buying a home. Closing costs are probably the most confusing part of closing a mortgage. For good reason too, they are often misquoted by inexperience or dishonest lenders and the subject of leader advertising.

Closing costs are broken down into 6 sections, which we will cover in detail. Each one of these sections represents a different set of fees from different entities. When comparing closing costs ALWAYS compare them with a good faith estimate (GFE). Each lender is required to furnish you a GFE before closing however, they only have to show it before you make a final application. (print out this blank, GFE, it will be helpful for the rest of the tutorial)

Some lenders will balk at furnishing a GFE early on in the application process especially if they don't have all of the documents they need to give you accurate figures. If you have given them all of the information that they need to give a credible quote they should give you a full GFE at the time of or before they quote you. If they do not then I suggest that you find another lender.

DO NOT ANALYZE CLOSING COST WITHOUT A GFE IN YOUR HAND.