closing costs & settlement costs

[Danny Shore]

"When you receive a Good Faith Estimate, these are "estimates" of what your closing costs will be. The reason these are estimates, is the actual costs will vary slightly. There are several unknowns on a purchae transaction most of the time, but we try to get as close as possible, so the borrower is not "shocked" when it gets down too the nitty gritty. I have always tried to estimate a little bit to the high side, so the surprises are less apparent.

After the loan is approved, and you are getting near the closing, the settlement costs will be used from your Good Faith Estimate in a more precise manner. If the Good Faith Estimate were to be exact, then there would be no difference in closing costs and settlement costs. In reality, unless you are actually closing on the 15th of the month, there wil be slight differences. Actual homeowners insurance costs and property tax escrows will also cause the actual settlement costs to vary as well.

Settlement costs are the actual amounts being paid to different parties which have contributed to the mortgage traansaction. Appraisals, credit reports, title insurance, attorney's fees, recording fees, (some states transfer taxes), realtor fees for both the buyer and seller, mortgage payoff amounts to clear the lien to the home, homeowners insurance, closing agent fees, and oh yes, if there is anything left over, we brokers like to get paid as well, and the lender we send the loan to has to get their money, and flood certifications, surveyors, etc."

1. What are the unknowns?
2. What is the significance of the 15th of the month?