Closing costs are charges and fees that are paid upon the sale of a building, property or business, usually by the buyer. They include broker's fees, government fees and fees paid up front by the lender like appraisal, inspection and credit report charges. They also include pre-paid items like interest due from closing to the first day of the next full month, mortgage insurance and hazard insurance. Closing costs also may include escrow deposits for insurance and taxes.

Since closing costs can mean a significant cash investment, getting an accurate estimate can help to save frustration and stress at closing time. They also vary by location and lender, so it's beneficial to shop around for different rates. To prepare for mortgage closing costs:

1. Use a calculator to tally fees, costs and escrow closing costs.

2. Get tips and information from experts to save on closing costs.

3. Shop around for lenders with a closing costs directory.

Action Steps
The best contacts and resources to help you get it done

Find closing costs with a mortgage calculator

Knowing what costs need to be paid at settlement is important. A lender must provide detailed closing costs before closing, but it's also helpful to get an idea of what the costs will be by using a calculator.

I recommend: Mortgage-investments lists fees, title charges and additional charges, and includes a calculator to enter purchase price, down payment and other information. Countrywide Mortgage offers a calculator as well as details about closing costs.

Get closing costs information

Closing costs vary by location and lender. There are ways to cut closing costs, although with some lenders this involves taking on a higher mortgage payment.

I recommend: RealEstate offers a closing costs checklist and gives advice for choosing the best lender. SmartMoney discusses ways to cut closing costs, including shopping around for lower rates. First Business Brokers provides a list of possible closing costs when selling a business.

Save with a low closing costs provider

Lenders offer a variety of packages and various levels of closing costs. Some lenders allow the closing costs to be financed, but this will result in a longer mortgage or higher payment.

I recommend: E-Loan offers a program that reduces closing costs by choosing a loan with a higher interest rate. ING Direct offers low closing costs and a guaranteed rate for 60 days for new homes and 30 for refinancing. Bank of America offers a mortgage with no fees or closing costs.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Lenders are required by law to give a closing costs list and details of all fees prior to settlement. Make sure you ask questions and understand all costs before signing off.
• •  Do research on mortgage closing costs. Lenders often use varying terms, which can be confusing. Research each fee and charge in detail in order to compare lenders.