When you purchase a home, you'll encounter a set of fees and expenses beyond the down payment, known as closing costs. These are fees charged by various third parties involved in the real estate transaction, as well as prepaid items. For buyers, these costs typically range from 2% to 5% of the loan amount or purchase price, though this can vary significantly based on location and the specifics of the transaction.
Key Components of Buyer Closing Costs:
Lender Fees: These cover the costs incurred by the lender to process and underwrite your mortgage. This can include origination fees, points, processing fees, and underwriting fees.
Appraisal Fee: A fee paid to an appraiser to determine the fair market value of the property. Lenders require this to ensure the loan amount doesn't exceed the home's value.
Credit Report Fee: Covers the cost of obtaining your credit history and score, which lenders use to assess your creditworthiness.
Title Insurance: This protects both the lender and the buyer against any claims or defects in the title of the property. You'll typically pay for both a lender's policy and an owner's policy.
Escrow Fees: Paid to the escrow or title company for handling the closing process, including the disbursement of funds and the transfer of ownership.
Recording Fees: Charged by the local government (county or city) to record the property deed and mortgage in public records.
Prepaid Items: These are expenses you pay in advance at closing:
Homeowners Insurance: You'll often need to pay the first year's premium upfront.
Property Taxes: A portion of your annual property taxes might be collected to fund an escrow account.
Mortgage Interest: You may need to pay per diem interest from the closing date to the end of the month.
How the Calculator Works:
This calculator estimates your buyer closing costs by summing up various common fees. It takes into account:
Lender Fees (Percentage of Loan): Calculated as (Loan Amount * Lender Fees Percentage) / 100.
Origination Fee (Percentage of Loan): Calculated as (Loan Amount * Origination Fee Percentage) / 100.
Appraisal Fee: A flat fee.
Credit Report Fee: A flat fee.
Title Insurance Fee: A flat fee (can vary significantly).
Escrow Fee: A flat fee.
Recording Fees: A flat fee.
Prepaid Homeowners Insurance: Assumes payment of the first year's premium.
Prepaid Property Taxes: Calculates a prorated amount based on the annual property taxes and a portion of the loan term that might be prepaid into an escrow account. This is a simplified estimation.
Per Diem Interest: Calculates the interest owed from the closing date until the end of the month. This depends on the exact closing date, which isn't an input here, so a typical estimate is used.
The total estimated closing costs are the sum of all these individual components. Remember, this is an estimate, and actual costs may vary. It's crucial to review your official Loan Estimate and Closing Disclosure from your lender for precise figures.
function calculateClosingCosts() {
var purchasePrice = parseFloat(document.getElementById("purchasePrice").value);
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var lenderFeesPercent = parseFloat(document.getElementById("lenderFeesPercent").value);
var originationFeePercent = parseFloat(document.getElementById("originationFeePercent").value);
var appraisalFee = parseFloat(document.getElementById("appraisalFee").value);
var creditReportFee = parseFloat(document.getElementById("creditReportFee").value);
var titleInsuranceFee = parseFloat(document.getElementById("titleInsuranceFee").value);
var escrowFee = parseFloat(document.getElementById("escrowFee").value);
var recordingFees = parseFloat(document.getElementById("recordingFees").value);
var homeownersInsurance = parseFloat(document.getElementById("homeownersInsurance").value);
var propertyTaxesAnnual = parseFloat(document.getElementById("propertyTaxesAnnual").value);
var loanTermMonths = parseFloat(document.getElementById("loanTermMonths").value);
var totalClosingCosts = 0;
// Input validation
if (isNaN(purchasePrice) || purchasePrice <= 0) {
alert("Please enter a valid Purchase Price.");
return;
}
if (isNaN(loanAmount) || loanAmount <= 0) {
alert("Please enter a valid Loan Amount.");
return;
}
if (isNaN(lenderFeesPercent) || lenderFeesPercent < 0) {
lenderFeesPercent = 0; // Assume 0 if invalid
}
if (isNaN(originationFeePercent) || originationFeePercent < 0) {
originationFeePercent = 0; // Assume 0 if invalid
}
if (isNaN(appraisalFee) || appraisalFee < 0) {
appraisalFee = 0;
}
if (isNaN(creditReportFee) || creditReportFee < 0) {
creditReportFee = 0;
}
if (isNaN(titleInsuranceFee) || titleInsuranceFee < 0) {
titleInsuranceFee = 0;
}
if (isNaN(escrowFee) || escrowFee < 0) {
escrowFee = 0;
}
if (isNaN(recordingFees) || recordingFees < 0) {
recordingFees = 0;
}
if (isNaN(homeownersInsurance) || homeownersInsurance < 0) {
homeownersInsurance = 0;
}
if (isNaN(propertyTaxesAnnual) || propertyTaxesAnnual < 0) {
propertyTaxesAnnual = 0;
}
if (isNaN(loanTermMonths) || loanTermMonths <= 0) {
loanTermMonths = 360; // Default to 30 years if invalid
}
// Calculations
var lenderFees = (loanAmount * lenderFeesPercent) / 100;
var originationFee = (loanAmount * originationFeePercent) / 100;
// Estimate prepaid interest (assuming closing on the 1st of the month for simplicity,
// or prorated for the remaining days of the month if closing mid-month)
// This is a simplification; actual calculation depends on exact closing date.
// For this calculator, we'll estimate the prepaid portion until the 1st of the next month.
// Let's assume a closing date implies paying interest for the remainder of the current month.
// Since we don't have a specific closing date, a simplified approach is to estimate a portion.
// A common practice is to pay interest from closing day to the end of the month.
// Let's add a placeholder for this that is often included in closing costs.
// A more precise calculation requires a closing date input. For now, let's assume a small placeholder or skip.
// For simplicity in this example, we'll add a general estimate or omit if it complicates too much.
// Often, ~15-30 days of interest are paid. Let's estimate 15 days of interest.
// Assuming an average loan payment (P&I) for estimation purposes.
// A simplified way is to show it as a separate line item if the user wants to add it.
// For a robust calculator, interest per diem is calculated as:
// MonthlyInterest = (LoanAmount * AnnualInterestRate) / 12
// DailyInterest = MonthlyInterest / daysInMonth
// Prepaids = DailyInterest * (daysInMonth – closingDayOfMonth)
// Without an interest rate and closing day, we'll omit this for now or add a note.
// Prepaid Property Taxes and Homeowners Insurance (pro-rated for escrow account)
// Lenders usually require 2-6 months of taxes and insurance to be put into the escrow account at closing.
// For simplicity, we'll add the annual insurance and taxes as a component,
// and acknowledge that a portion of these will be prepaid into escrow.
// A common requirement is funding for approx. 2-6 months.
// Let's include 2 months of property tax and 2 months of homeowners insurance as a common prepaid escrow amount.
var prepaidPropertyTaxes = (propertyTaxesAnnual / 12) * 2; // 2 months
var prepaidHomeownersInsurance = (homeownersInsurance / 12) * 2; // 2 months
totalClosingCosts =
lenderFees +
originationFee +
appraisalFee +
creditReportFee +
titleInsuranceFee +
escrowFee +
recordingFees +
homeownersInsurance + // Assuming first year premium is paid
prepaidPropertyTaxes + // Portion for escrow
prepaidHomeownersInsurance; // Portion for escrow
// Format the result
var formattedClosingCosts = totalClosingCosts.toLocaleString(undefined, {
style: 'currency',
currency: 'USD'
});
document.getElementById("result-value").innerText = formattedClosingCosts;
}