Settlement Charges

The U.S. Department of Housing and Urban Development (HUD) protects home buyers in the marketplace. HUD requires that all costs associated with the purchase of a home are clearly shown to buyers. The form used for this purpose is called the HUD-1 Statement.

Typical settlement charges associated with the purchase of a home that is financed through a lender are described below.

Generally speaking, total costs you might expect to pay range between 3% to 6% of the amount of your mortgage loan. Your particular settlement may not include all of the items below or may include others not listed.

Sales/Broker's Commission
Fees to process, approve, make the mortgage loan.
Accrued interest, mortgage insurance premiums and/or hazard insurance premiums.
Settlement or closing fee
Abstract or title search
Title examination
Title insurance binder
Document preparation
Notary fees
Attorney’s fees
Title Insurance
Lender’s hazard, mortgage insurance coverage
Owner’s insurance coverage
Government recording and transfer charges
City and county tax stamps on Deed and Mortgage
State tax/stamps: Deed, Mortgage

Additional Settlement Charges may include survey and pest inspection.

Some fees such as those for credit reports and appraisals are usually paid outside of the closing by the borrower before closing/settlement. They are additional costs to you.

Other fees such as those paid by the lender to a mortgage broker or other settlement service providers may be paid after closing/settlement. These fees are usually included in the interest rate or other settlement charge. They are not an additional cost to you. These types of fees will not be added into the total.

(Source: U.S. Department of Housing and Urban Development, http://www.hud.gov/buying/index.cfm)