What Are Closing Costs?

So you’re almost ready to finalize your home loan, and all that’s left is to schedule your closing. That is so exciting! Or maybe, you’re at the beginning of the process and have questions like “What are closing costs exactly?” It’s a good question, and we’re here to answer it! We want to make the home buying process a smooth experience from beginning to end.

Scheduling Your Home Loan Closing

Before your loan closes, you will receive an initial Closing Disclosure showing the actual terms of your transaction. You will have 3 business days to review it before your closing occurs. This initial Closing Disclosure may be delivered to you in one of two ways. It may be sent via regular U.S. mail or it may be electronically delivered through DocuSign®. If the initial Closing Disclosure is sent through U.S. mail, then your closing will generally be scheduled 6 business days after it was mailed. However, if the initial Closing Disclosure is electronically delivered, this option can put you on the faster path to closing. Your closing can generally be scheduled 3 business days after you electronically sign the disclosure.

There are a couple of reasons why your closing date may be scheduled later. The number of business days before closing may increase if there is a federal holiday within that time period. Also, Sundays are not counted as a business day.

Closing Costs Explained

Closing costs are fees associated with the settlement (or “closing”) of a real estate transaction and are usually paid at closing when the loan documents are signed. These fees are for the services provided during the loan origination process, and they can vary widely depending on where you live. You will see your approximate closing costs on the Loan Estimate that you receive within three business days after the lender receives your completed loan application. At Vanderbilt, some of your closing costs can be included in the principal loan amount so that you do not have to bring as much money to closing.

Common Fees You’ll See

A breakdown of the actual closing costs will also be available on the Closing Disclosure that you receive for review three business days before your scheduled closing. But here are some common fees you may see on your Closing Disclosure:

• Origination fee payable to the lender for originating the loan
• Document preparation fee payable to the title company for drafting conveyance documents, like the deed and mortgage
• Appraisal fee to determine the property’s value
• Survey fee to determine the property’s boundaries
• Title search and title insurance to insure the lender’s security interest in the property
• Flood certification to determine if the property is located in a flood zone
• Property taxes to local government agencies
• Attorney fees for conducting the loan closing

This list does not include all the charges you may see on your Closing Disclosure, but it gives you a good idea of what to look for in the breakdown. When reviewing the initial Closing Disclosure received three days before closing, make sure to ask your loan originator any questions for items and services you don’t understand. Twenty-four hours before the scheduled closing, you may schedule time to review the entire closing package at the title company. This way you can ask questions and obtain answers without feeling rushed.

On closing day, you’ll brings items with you like your photo ID and proof of homeowners insurance and any closing funds if needed. Then the fun part – you’ll schedule your move-in day!

Do you have questions about other home loan transaction details such as the down payment? Learn more with our Guide to Down Payments.

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