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How Do I Calculate Closing Costs On A Fixed Rate Mortgage?

By Bob Redtree

When most people shop for a mortgage rate, the main factors that are considered is the interest rate, whether or not they will have to pay mortgage insurance, and the amortization schedule. One factor that also needs to be considered is closing costs. To calculate closing costs, many factors need to be included.

Origination Fees

The first set of costs that must be considered when you calculate closing costs on a fixed rate mortgage are origination fees. Origination fees are fees that are paid directly to the bank as compensation for them originating the loan. This fee is normally only a few hundred dollars, but in extreme situations it could cost as much as one half of a percent of the principal balance borrowed.

Mortgage Points

The second set of costs that must be considered when you calculate closing costs on a fixed rate mortgage are mortgage points. Mortgage points are fees that are paid by an individual to pay down their mortgage interest rate. These fees can vary significantly from one person to the next, and are always paid up front at mortgage closing. Most people who buy points, pay for one point, which costs one percent of the mortgage balance and pays down the rate by 0.25%.

Underwriting Fees

The third set of costs that must be considered when you calculate closing costs on a fixed rate mortgage are underwriting fees. Underwriting fees, which normally cost up to $500, are fees that are charged by the bank to compensate them for the costs associated with determining your credit qualify and probability of default. This could also include costs for pulling a credit report.

Related posts:

1. When Getting A Mortgage Rate Quote What Closing Costs Should I Factor In?
2. What Closing Costs Are Relative When Getting A Mortgage Rate Quote?
3. How Do Closing Costs Impact My Mortgage Rate?
4. How Do I Get The Lowest Closing Costs On My Mortgage Loan?
5. Are There Closing Costs For A Second Mortgage?