How to Calculate Mortgage Closing Costs

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This article is a guest post feature from The Wood Group of Fairway, a Texas mortgage lender with 18 locations across the state. They simplify the process with the perfect mix of technology and real human help.

No matter which loan program you choose, there will be closing costs – although some programs allow you to roll closing costs into your loan term. If you ask your lender for a closing sheet, they should be able to provide you with one ahead of time. Closing costs may be a factor as you compare lenders.

Closing costs are separate from your down payment. They don’t go toward the equity you have in the home. Let’s run down the different fees you may see on your closing sheet. Remember, these are ballpark estimates. They may vary from lender to lender. Your specific loan program may require different kinds of fees, too. The VA loan program is one example of a loan type that requires a unique fee.

Pre-paid costs

Pre-paid closing costs go toward expenses you’ll have in the near future. If you weren’t to pay them as part of your closing costs, you’d have to pay for these items anyway. So you shouldn’t feel like these items are burning a hole in your pocket. You’re just getting a head start.

Read more: Use a Mortgage Calculator to Estimate Monthly Payments

One-time fees

The other side of closing costs are composed of fees you’ll only pay once.


One “point” equals 1% of your loan amount. You can choose to pay points to lower your interest rate. Make sure to ask your lender how much the rate will be lowered by when considering each point you pay. Your lender should also be able to help you determine if paying points will benefit you. That answer will partly hinge on how long you plan to stay in the home.