All prepaid finance charges are closing costs but all closing costs are not prepaid finance charges. An example of a prepaid finance charge: in a cash transaction the cost of an appraisal is $300 but the same appraisal fee would be $400 in a credit transaction (one that involves a mortgage loan)-the difference of $100 would be a finance charge.

Buyers typically pay the following closing costs: fees charged for obtaining a mortgage; inspection fees; homeowners insurance (must be prepaid for one year at closing); transfer taxes if there are.

Bankrate's 2017 Closing Costs Survey found the average fees due at. but closing toward the end of the month will save on prepaid interest.

In short, closing costs are the fees incurred as a result of getting a home loan. Closing costs are generally the responsibility of the buyer. Oftentimes, however, closing costs are divided between the buyer and the Seller while negotiating the final home price. prepaid items. Depending on the home, the prepaid items could be a generous chunk.

However, there’s little to no room for negotiation with things like city, county and state transfer taxes, prepaid property taxes and recordation fees. (read more, here: property taxes: How They Are.

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It’s also worth noting that prepaid items are always paid at closing but escrow accounts are not always required by the lender. If you are putting less than 20% down on a new home or have less than 20% equity in your home during a refinance the odds are good the lender will require an escrow account.

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Mortgage closing costs are a big part of buying or refinancing a home. Here are the average closing costs for each type, and what you can do to pay as little as possible.. Prepaid items.

As a rule of thumb, closing costs to buy a home run about 2 to 4 percent of the purchase price, with the average around 3% of the sales price. Much depends on the points and origination fees a lender charges to make the loan, which used to be disclosed on the buyer’s Good Faith Estimate, but today is now called a loan estimate.