Worried about closing costs for your new home? Don’t be. Even though you won't know what the actual costs are until you're at the closing table, the law is on your side. RESPA, the Real Estate Settlement Procedures Act, is a law to which residential real estate purchases secured with a mortgage must conform. It requires your lender to provide you with a good-faith estimate of what those costs will be.

Closing costs are not part of the price of the property you're buying; most are expenses associated with obtaining a mortgage loan.

One of the most important things to remember is that closing costs are negotiable. Your real estate agent or attorney can help you bargain with both the seller and your lender, in order to reduce or even eliminate some of the closing costs altogether.

Typical costs paid at closing include:

• Loan Fees: These include your loan origination fee, which is usually a percentage of your loan amount. This percentage isn't set in stone, but varies from lender to lender. If you choose, you may also pay a one-time loan discount fee (also known as discount points) to your lender in exchange for the lender's lowering your interest rate.
  
  Each point is equivalent to one percent of the loan amount and will lower your interest rate by 0.125 percent. If you are obtaining a 30-year loan at 7.5 percent, buying one discount point will lower your rate to 7.375 percent. Several factors must be considered when determining if purchasing discount points will save you money, including how long you plan to keep the loan. So do the math before you commit to buying them.
• Appraisal fee: This is the fee your lender paid an appraiser to determine the current market value of the property you want to buy.
• Credit fees:The cost your lender paid to obtain your credit report are credit fees. Your credit score is a major factor that lenders consider when deciding whether or not to grant you the loan.
• Inspection fees: Your lender may also charge you an inspection fee, if the home you are buying or building is still under construction at closing. Inspection costs also include tests for radon, tests for termites and other specialized inspections performed on the property prior to closing.
• Insurance fees: If your down payment isn't large enough for your lender to approve your loan, without requiring that you obtain private mortgage insurance, your lender may charge you a mortgage insurance application fee.
  
  You will be required to pay for title insurance to protect against paying for a property without clear title. Some states require attorneys to handle title searches; in others, title insurance companies perform the search.
  
  Homeowners’ insurance is another requirement. It protects you and your lender from damage to your home caused by fire, windstorms and other hazards. In addition, if your new home is located in a flood zone, you will need to purchase flood insurance.
• Legal and Loan Assumption fees: These cover your attorney's work and the additional work your lender performed if you are assuming the seller's existing mortgage.

Closing Costs Paid in Advance

In real estate, paying "in advance" means paying before the costs are actually incurred. For example, prepaid interest is the interest due on the loan from your day of closing until your first monthly payment.

Lenders want to be sure that the money is there when the next year's property taxes and insurance premiums are due, so most loans include prepayment that goes into an escrow account for this purpose; however, RESPA (Real Estate Settlement Procedures Act) limits the amounts your lender can require you to pay in advance.

Other closing costs include charges for home warranties, recording fees for having your deed and other documents relating to your real estate purchase recorded in public records. They may also include fees for sending documents to your lender overnight and fees for wire-transferring funds.

Some states charge a document stamp fee, typically calculated at a set rate per $1000 of loan value. If you are purchasing a condo or a home located in a neighborhood with a homeowners’ association (HOA), you may need to pay HOA fees.

Remember, this is a general list of typical closing costs. You may not have to pay for each of the costs listed, and you may have additional fees that are not listed here. The best way to know how much money you need to budget for closing is to ask your lender, your attorney and your real estate agent to provide you with lists of the closing costs they anticipate. Compare those lists to be sure that all of the bases are covered and then see which fees you can lower through negotiation.