Within three days
of taking your loan application,
your lender is required by The
Real Estate Settlement
Procedures Act (RESPA) to
prepare a Good Faith Estimate of
your closing costs. A good faith
estimate is a lender's best
approximation of your closing
costs, so you'll have an idea of
how much money you'll need to
bring to the closing.
The Good Faith
Estimate is often a range of
charges which are the lender's
best approximation of fees.
The costs will
vary with the person or company
who does the work. Often the
lender will offer a range of
values to account for
differences in costs for the
same item. The Good Faith
Estimate lets you know
approximately how much money you
will need to close.
Buyers and
sellers pay different closing
costs. Specific costs are normal
for each. Some of the buyer
costs can be shifted to the
seller when negotiated in the
contract. The actual closing
costs are presented to the buyer
and the seller at closing on the
HUD-1 Settlement Statement.
Closing costs
can be divided into five
categories:
- Costs
related to the buyer's
mortgage
-
Government related costs
- Items
required by the lender to be
paid in advance
- Items
related to the title
- Other
fees
