by Jeff Ragan
A closing costs calculator can be helpful in estimating your overall costs. Below, you'll find a really cool mortgage calculator.
This can help you compute the approximate closing costs required for your new home loan.
Figure your closing costs by plugging in numbers from your Good Faith Estimate. This is a document you received from your potential lender.
Federal law requires them to provide you one.
If you do not have one, no worries, you can still guess what the number will be. You will not break the calculator.
It is a good idea to have these figures handy so you can compare with what other lenders are offering.
Remember that property taxes are always a part of your closing costs. Other fees include your credit report, title insurance, and the appraisal.
Those fees can vary depending on which company is used.
These fees are estimated in your closing costs on this calculator.
This is quite the calculator, so let me walk you through how to use it.
Now do the following:
Click on the calculate button.
The results screen will show you the loan amount, down payment amount, closing costs, prepays, monthly payment, total monthly payment (this amount includes principle, interest, taxes and hazard insurance; PMI, if any, is not included) and APR.
The loan amount is the sales price minus the down payment. You can change the down payment percentage and see what your payment changes to.
Let's move on with our closing costs calculator. You will need your good faith estimate that the lender should have given you. In the calculator it figures these costs by using 2% of the loan amount.
Discount points is zero, but put the number 1 in here so you can see what happens. Notice your costs will go up. Discount points is the percentage you plan to pay to lower your interest rate. So its really not a discount. Watch what you are agreeing to. If the interest rates are high, this might be good to buy down. But if they are low, you don't need this.
Look on your good faith estimate for the approximate figures your loan officer put down for appraisal, credit report, loan origination, recording fees, etc. Until the loan officer orders these services they can only estimate them. So they may go up or down on your final HUD-1 Settlement Statement.
Now let's move on to the pre-pays!
The property taxes are one of the prepays. Ask the real estate agent what the property taxes were for last year on this home. The calculator estimates about 7 months of taxes, but this can change depending on the time of year you close.
Remember, this closing costs calculator is only estimating. Usually you have to pay the taxes from when you close on the home to when they are due again. For example, if you close in May and the next tax payment is due in September, you may have to pay 4 or 5 months at closing. This calculator just figures approximately seven months for now.
This calculator doesn't take into account if your home has home owners association fees. What are these? Some residential areas have home owners associations (HOAs) and they have a monthly fee you have to pay to be in their association. If the property is in the association's area, this is a requirement. Thus you may have to add that to your total figure to get a more accurate calculation of your closing costs. Then a monthly figure will have to be added to your total payment as well.
Mortgage (P&I) or private mortgage insurance (PMI) is required if your mortgage is not below 80% of the purchase price. You should find this on the good faith estimate also. A small down payment usually means you might have to pay monthly mortgage insurance. Since this figure is not included in this calculator, you will want to add this in if you are required to pay this. It will also affect your total monthly payment.
Once you have all these figures added in, you will have a good idea of your total closing costs. Every area is different in what is required, so its hard to create a calculator to include everything. But your Good Faith Estimate gives you a pretty good picture. Just watch out for those unnecessary closing costs.
Wow, you have been estimating closing costs. Use this closing costs calculator with each deal and see which one is giving you the better mortgage offer.