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Mortgage Closing Costs

So you've got your figures in a column and are set on what you can afford...but you forgot the closing costs. Uh-oh. Make sure you know what the closing meeting will require financially and take steps to make those costs as low as possible.

The first part of closing costs will be the rest of the down payment not already paid when you had your offer accepted.

Next there are the costs associated with the mortgage and its accompanying legal fees. You can get an accurate assessment of these fees when you apply for your mortgage so there will be no surprises. These fees can include title searches and insurance, tax services, couriers, etc. However, there will be additional charges that your lender will include. Make sure you get these up front and don't be afraid to question a fee that may be an inflated add on. These fees should be negotiable with your lender or broker. Points are included in this category.

Then there are fees paid to the seller for various items, for example a negotiated washer and dryer or the remainder of property taxes already paid for or utility bills. In calculating the closing costs, do not forget insurance (including flood insurance if necessary) and property taxes. The acronym PIT (principal, interest and taxes), or PITI (principal, interest, taxes and insurance) can be helpful. For example, you will need to bring in a paid homeowner's insurance policy at closing. The lender will set up an escrow account for the PITI so that the lender will have the funds to pay for them when they are due.

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