Closing Costs Made Clear

Did you know that closing costs account for an average of 5% of a home’s purchase price? Since these costs can vary, many homebuyers don’t know what to expect until the day of closing, but new RESPA (Real Estate Settlement Procedures Act) regulations will give consumers a better idea of what the total costs will be.

RISMedia reports that as of January 1, 2010, RESPA will require that lenders fully disclose all closing costs, costs of obtaining a loan, and estimated costs for title insurance, settlement and other services within three days of a buyer applying for a mortgage. Not only that, forms used in the closing process, including the Good Faith Estimate (GFE) have been revised to make them easier for consumers to understand. The new GFE form is intended to encourage buyers to shop around and compare costs from different lenders before choosing a mortgage. With the new regulations, the Department of Housing and Urban Development estimates that consumers will save an average of $668 on every loan.

Have you been confused by closing documents? Do you think that this new regulation will make it easier for consumers to understand what they are paying for at closing?