Data Source and Methodology
Primary references:
- Consumer Financial Protection Bureau (CFPB), “Closing costs explained,” updated 2024. Direct link: consumerfinance.gov/owning-a-home/closing-costs.
- Fannie Mae, “Your Home – Closing Costs Calculator,” 2024. Direct link: yourhome.fanniemae.com/calculators-tools/closing-costs-calculator.
Tutti i calcoli si basano rigorosamente sulle formule e sui dati forniti da questa fonte.
Where state or lender-specific schedules vary, the tool uses industry-typical ranges and lets you adjust line items to mirror your transaction.
The Formula Explained
Buyer side
Loan = Price - DownPayment
Points = Loan \times \frac{Points\%}{100}
Origination = Loan \times \frac{Origination\%}{100}
LenderTitle = Price \times \frac{LenderTitle\%}{100}
OwnerTitle_{BuyerPortion} = Price \times \frac{OwnerTitle\%}{100} \quad \text{(if Buyer pays)}
TransferTax_{BuyerPortion} = Price \times \frac{TransferTax\%}{100} \times s
where s \in \{0, \tfrac{1}{2}, 1\}
for Seller/Split/Buyer.
PerDiemInterest = Loan \times \frac{Rate\%}{100} \times \frac{Days}{365}
TaxEscrow = Price \times \frac{TaxRate\%}{100} \times \frac{MonthsTax}{12}
InsEscrow = \frac{AnnualInsurance}{12} \times MonthsIns
BuyerClosingCosts = \sum(\text{line items})
CashToClose = DownPayment + BuyerClosingCosts - SellerCredits
Seller side
OwnerTitle_{SellerPortion} = Price \times \frac{OwnerTitle\%}{100} \quad \text{(if Seller pays)}
TransferTax_{SellerPortion} = Price \times \frac{TransferTax\%}{100} \times (1 - s)
with the same s
mapping.
Commission = Price \times \frac{Commission\%}{100} \quad \text{(if included)}
SellerClosingCosts = \sum(\text{seller line items})
NetProceeds = Price - Commission - SellerClosingCosts - MortgagePayoff - SellerCredits
Glossary of Variables
- Purchase price: Contract price of the property.
- Down payment: Cash contribution by the buyer at closing.
- Loan amount: Price minus down payment.
- Origination fee (%): Lender charge as a percent of loan amount.
- Discount points (%): Upfront interest to reduce the mortgage rate (1 point = 1% of loan).
- Appraisal, credit report, inspection: Third-party fees associated with underwriting and due diligence.
- Title insurance: Lender’s policy (buyer) and owner’s policy (often seller); customs vary by state.
- Transfer taxes: State or local tax on the transfer of property.
- Recording fees: Government charges for recording the deed and mortgage.
- Prepaid interest: Interest collected from closing to first payment.
- Escrows: Initial deposits for taxes and insurance.
- Seller concessions: Credits paid by the seller to the buyer, reducing buyer cash to close.
- Commission: Real estate brokerage fees, typically paid by the seller.
- Mortgage payoff: Outstanding balance the seller pays off at closing.
How It Works: A Step-by-Step Example
Scenario: Buyer purchasing a $450,000 home with 20% down, 6.5% interest rate, 0 points, 0.5% origination, lender’s title 0.25%, owner’s title paid by seller, transfer tax 0.3% paid by seller, appraisal $600, credit $40, inspection $500, recording $125, 15 days per-diem, property tax 1.0% with 3 months escrow, annual insurance $1,200 with 3 months escrow, seller credits $0.
- Loan = 450,000 − 90,000 = $360,000
- Origination = 360,000 × 0.5% = $1,800
- Lender title = 450,000 × 0.25% = $1,125
- Per-diem interest = 360,000 × 6.5% × 15/365 ≈ $962.47
- Tax escrow = 450,000 × 1.0% × 3/12 = $1,125
- Insurance escrow = 1,200/12 × 3 = $300
- Other fees = appraisal 600 + credit 40 + inspection 500 + recording 125 = $1,265
- Buyer closing costs ≈ 1,800 + 1,125 + 962.47 + 1,125 + 300 + 1,265 = $6,577.47
- Cash to close = 90,000 + 6,577.47 − 0 = $96,577.47
This fits within typical buyer cost ranges (about 1.5% of price here, excluding owner’s title and transfer tax paid by the seller).
Frequently Asked Questions (FAQ)
How do closing costs differ from the down payment?
The down payment reduces the loan amount. Closing costs are additional fees and prepaids required to complete the transaction.
Can I roll closing costs into the loan?
Sometimes. For purchases, rolling costs into the loan may require a higher price or lender credit; refis more commonly allow it. Program rules apply.
Are estimates in this calculator legally binding?
No. They are planning estimates. Your lender’s Loan Estimate and Closing Disclosure detail actual charges.
Do I need an owner’s title policy?
It’s optional but strongly recommended to protect your ownership. In many markets, the seller pays it; this is negotiable.
Why do costs vary by location?
State and local transfer taxes, title premiums, and recording schedules vary widely, as do customary payor splits.
What if my down payment exceeds the purchase price?
That’s invalid. The tool will prompt you to correct the value—down payment cannot exceed the price.
How can I reduce cash to close?
Negotiate seller credits, seek lender credits in exchange for a higher rate, or adjust discretionary items like discount points.