What are the typical closing costs associated with obtaining a mortgage?

Closing costs are essential components of the mortgage process and typically include various fees associated with processing and finalizing the loan. Loan origination fees and discount points represent common charges that borrowers encounter at closing.

Loan origination fees are charged by the lender for evaluating and preparing your mortgage loan. This fee compensates the lender for the time and resources involved in processing the application. Discount points are upfront fees paid to lower the interest rate on the loan, resulting in reduced monthly payments for the borrower. Both these costs are integral to obtaining a mortgage and are therefore directly related to the closing process.

The other options refer to various costs and components that, while associated with mortgages, do not typically represent the closing costs one would encounter. Principal and private mortgage insurance pertain more to the loan itself rather than the closing process. Interest rates are ongoing costs that Borrower faces but not a specific closing cost. Savings account fees and appraisal charges, while relevant in some contexts, do not represent the standard set of closing costs associated directly with the mortgage loan acquisition process.