Closing Costs Calculator

How does this closing costs calculator work?

This is a handy tool that may help in case you need to find a rough estimation of the money you should have available at the beginning in order to purchase your own home by a mortgage loan, meaning the amount for the down payment and the cash for the closing costs the buyer usually pays.

It takes account of the following variables that should be known:

• Property price;
• Down payment value;
• Closing costs percentage which usually varies between 3 – 5% from the loan amount borrowed. It can be edited whenever needed.
• Fixed annual interest percent;
• Loan term in years.

The algorithm behind this closing costs calculator applies the equations explained below:

1) Your closing costs will be: [A] = (HPP – DWP)*CCP/100

2) Loan amount borrowed: [B] = HPP – DWP

3) Your total effort at the beginning (closing costs + down payment) will be: [C] = [A] + DWP

4) Your monthly payment (principal + interest): D=B AIR/〖1-(1+AIR)〗^(-N)

5) Total paid for the loan (principal + interest): [E] = D * N

6) Total interest paid for the loan: [F] = [E] – [B]

7) Your total effort (loan + closing costs + down payment): [G] = [E] + [C]

Where:

HPP = Home purchase price

DWP = Down payment

CCP = Closing costs percentage

AIR = Annual interest rate/1200

N = Loan term in years*12

What are closing costs?

Briefly closing costs can be defined as the fees and charges of any type, an individual has to pay at the closing moment of a real estate transaction (usually through a mortgage loan contract), which more specifically represents the moment when the title to the property is conveyed to the buyer. Closing costs can be paid either by the buyer, seller or both and are in relation with the transaction itself.

Types of closing costs

• Loan origination fee which usually is either 1% of the amount taken.
• Appraisal fee.
• Loan discount fee.
• Loan application fee which is usually between $75 and $450.
• Discount points for lower interest rates.
• Attorney fees either for the lender and/or buyer.
• Notary fee.
• Appraisal fee.
• Credit report charge.
• Broker commission.
• Inspection fee.
• Processing fee.
• PMI insurance to protect the lender lender.
• Recording fee.
• Title insurance to protect you or your lender.
• Pest inspection.
• Tax stamps.

How much you will most probably pay as closing costs?

Roughly the amount you should expect to pay as closing costs varies between 3 and 5% from the loan amount borrowed, which in case of someone taking $200,000 that would be between $6,000 and $10,000.

Example of a calculation

In case of a property value of $235,000, with a down payment value of $50,000, an assumed level of closing costs of 5% from the amount taken through mortgage, a fixed interest rate of 3.85% over 30 years will result in these figures:

■ Your closing costs will be: $9,250.00

■ Loan amount borrowed: $185,000.00

■ Your total effort at the beginning (closing costs + down payment) will be: $59,250.00

■ Your monthly payment (principal + interest): $867.30

■ Total paid for the loan (principal + interest): $312,226.28

■ Total interest paid for the loan: $127,226.28

■ Your total effort (loan + closing costs + down payment): $371,476.28