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How are real estate closing costs determined?

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Real estate closing costs can seem very confusing. It's true for many – you're not alone. Fees and closing costs, even taxes, can vary from state to state, and lender to lender. Depending on which lender you work with, you might not have all the information you need early on. But M&T Bank does its homework to make sure you get an accurate estimate as early as possible.

Let's clear a few things up. Here are the most common groups of costs and what they cover:

Third-party fees: There are a variety of services provided by third parties required to complete a real estate transaction in which the charges are passed on to the borrower. These charges are paid directly to the service providers and include: appraisals, credit reports, settlement/closing services, title insurance, surveys, tax service reporting, flood certification and possibly others based on your transaction. It won't matter who your lender is, they have to be paid; however, these fees can be negotiated to be paid by a seller or financed on refinance transactions.

Lender fees: These are fees associated with the work we do to prepare your mortgage. These mortgage closing fees can vary greatly from lender to lender and even from one loan program to another.

Property tax, insurance and such: You might need to pre-pay some items that are due in the future – the most common are:

  • Escrow Impounds: If you elect to set up an escrow account, you will have a deposit due for taxes and/or homeowner's insurance at the time of your closing. These deposits make sure money is available to pay for your property taxes and insurance when they're due. To learn more about escrow accounts and payment options, visit our Payment FAQ
  • Per Diem Interest: Most mortgages are due on the 1st of every month. If you close your loan on the 20th, you need to pay for those days of interest that will accrue until your first payment is due.