Closing costs (also referred to as “settlement costs”) are expenses that the buyer pays in connection with purchasing a home. Expenses can include the origination fee or points, processing fee, underwriting fee, appraisal fee, property taxes, homeowner’s insurance, settlement agent fees, title fees and recording fees.
Defining how closing costs are calculated can be tricky because they are not one specific line item, but instead a collection of variable expenses identified for different reasons. These can include:
- The state or county in which you are buying a house
- The lender you choose and their requirements
- The type of mortgage you are getting
- The real estate agents you are using to purchase your house
Most realtors and financial advisors tell you that closing costs will typically be in the range of 2-5% of the home value. This may seem reasonable enough, but when you are in the process of purchasing, that range can mean a difference of thousands of dollars. Your lender is required to provide a Loan Estimate within 3 days of submitting your loan application, which will give you a good idea of your expected closing cost estimate. Having a closing cost estimate up front will give you more time to have the proper amount of funds available.
How to use our cash-to-close calculator to calculate closing costs. Have the below items available:
- Sale price of the home–the purchase or listing price of the house you want to buy
- Down payment–the up-front amount you are planning to put down on the purchase of the home. It can be entered as a dollar amount or a percentage. Note that any percentages over 99% will automatically be calculated as a dollar amount.
- Estimated interest rate–the rate that you expect to receive on your financing
- Points charged–the origination fees and/or discount points charged by your lender. The standard is a 1% origination fee and zero points. If you do not know this information, assume a 1% origination fee.
- Property state–the state in which the house you are buying is located
***Disclaimer: This calculator is offered for illustrative and educational purposes only and it is not intended to replace a professional estimate. Calculator results do not reflect all loan types and are subject to individual program loan limits. All calculations and costs are estimates and therefore, Guild Mortgage (“Guild”) does not make any guarantee or warranty (express or implied) that all possible costs have been included. The assumptions made here and the output of the calculator do not constitute a loan offer or solicitation, or financial or legal advice. Please connect with a Guild loan professional for a formal estimate. Every effort is made to maintain accurate calculations; however, Guild assumes no liability to any third parties that rely on this information and is not responsible for the accuracy of rates, APRs or any other loan information factored in the calculations.