Closing costs can represent a large portion of the money needed to buy a home. These fees, generally ranging from 3 to 6 per cent of your loan amount, cover the expense of funding your loan and transferring the property title from the seller to the buyer. Your exact closing costs will vary according to your loan amount, lending institution, type of loan and any third party fees. By law, you will receive a good faith estimate from your prospective lender showing a total of projected costs you can expect to pay at closing.

Many lenders offer a variety of programs that allow you to finance all or a part of your non-recurring closing costs, thus reducing the up-front fees you will need in order to close. Some of these costs are explained below:

• Sample HUD Closing Statement
• Origination Fee:
  A fee paid to a lender for processing a loan application. The origination fee may be stated in the form of points. One point is 1% of the mortgage amount.
• Title Insurance
  Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.
• Homeowner's Insurance
  An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.
• Credit Report Fee
  A charge to obtain your credit report.
• Appraisal Fee
  A charge for appraising the home you are planning to buy.
• Recording and Transfer Fees
  These fees cover the recording of the change in title of the property you purchase in the official county records.
• Prorated Property Taxes
  Taxes assessed by the state/county/city/school district. Taxes will vary according to the purchase price, the local tax rate and the month in which you close your loan.
• Title Search and Title Insurance Fees
  Charges involved with verifying and insuring clear title to a property
• Prepaid Interest
  Interest to cover the amount due from funding until the first of the next month.