Closing costs are an important financial consideration for most home buyers. Not counting the down payment, closing costs typically can run anywhere from four to seventeen percent of the amount of the loan. Thus, on a $100,000 loan, these costs can be $4,000 to $17,000.

Not all closing costs are paid by the buyer. The buyer's portion of these costs can vary considerably, depending on the number of points being charged for the loan, whether the buyer is represented by an attorney and whether there are transfer taxes levied in the jurisdiction where the transaction occurs.

To look at some specifics, the number of points charged on a loan will vary, depending on conditions in the mortgage market. One point equals one percent of the mortgage amount, so on a $100,000 loan, every point costs $1,000. As such, there is a $2,000 difference between the cost of a loan with one point and the cost of a loan with three points.

At the closing, the seller will be represented by an attorney or an escrow agent. If a buyer chooses to be represented by an attorney, the cost can very considerably, depending on the amount of work the attorney must do. The fees can run anywhere from a couple of hundred dollars to a couple of thousand dollars.

Some jurisdictions may charge substantial transfer taxes which can run more than $1,000. In other jurisdiction, there is either no tax or a nominal one. Buyers in the first type of jurisdiction could therefore face a significant extra charge in their closing costs.

The Real Estate Settlement Procedures Act (RESPA) provided important information to home buyers about closing costs. Included in the requirements are:

• Good Faith Estimates - Your lender is required to provide a good faith estimate of all settlement services you are likely to incur. The estimate may be either a dollar amount or range for each charge.
• Lender Designation of Settlement Services Providers - If a lender designates that specific services providers be used for legal work, title examination, title insurance or the conduct of the settlement, RESPA requires certain guidelines to be followed. Included in the information which the lender must disclose are the name, address and telephone number of each service provider and whether these providers have any business relationship with the lender.
• Disclosure of Settlement Costs One Day Before Closing and Delivery - One business day before settlement, home buyers have the right to inspect a form called the Uniform Settlement Statement, which itemizes all the services and fees involved in the closing. If all the costs are not yet available, the lender is required to show you whatever costs are available.

RESPA requires that lenders provide a booklet about settlement costs when a home buyer submits a written mortgage application. The booklet contains helpful information about the settlement process and explains most of the expenses involved. If you are thinking of shopping for a new home, you may want to ask a local lender for a copy of the booklet now so that you will be able to shop more wisely for settlement services when you are ready to apply for a loan.