Make sense of closing costs before you sign.

Closing is the last step before the keys are yours, and it comes with its own set of costs. Closing costs, also called settlement costs, are the upfront charges to get your loan and transfer ownership of the home to you. They’re separate from your down payment, and they’re easy to underestimate.

Federal rules give you standard forms and time to review them. Once you know what to look for, closing day feels a lot less like a mystery.

What closing costs usually include

The exact list depends on your loan and location, but common charges include:

• Lender fees. What your lender charges to process and make your loan. Some buyers also choose to pay discount points, an upfront fee in exchange for a lower interest rate.
• Appraisal. An independent, professional appraiser estimates what the home is worth for the lender. You have a right to receive a copy.
• Title insurance and title services. “Title” is the legal record of who owns the property. These charges cover confirming and protecting that ownership as it passes to you.
• Government fees and taxes. Costs to transfer the property to you and to record your mortgage with the county records office.
• Prepaid costs. Some bills are paid ahead at closing, such as interest from your closing date to the end of that month and, often, your first year of homeowners insurance.
• Initial escrow deposit. If you’ll have an escrow account, which collects money for property taxes and insurance with your monthly payment, you’ll usually fund a starting balance at closing.

As the buyer, you generally pay these costs. Depending on your contract or state law, the seller may end up paying some of them.

Your two key forms: the Loan Estimate and the Closing Disclosure

The Loan Estimate

Once you give a lender a few key details, including the address of the home you plan to buy, it must send you a Loan Estimate within three business days. It shows the loan terms the lender expects to offer you, along with estimated costs.

A Loan Estimate isn’t an approval or a commitment. You haven’t agreed to anything by receiving one. By law, the only fee a lender can charge before you receive a Loan Estimate and tell the lender you want to proceed is a small fee for pulling your credit report.

The Closing Disclosure

Before closing, your lender must give you a Closing Disclosure at least three business days ahead of time. It shows your final loan terms, monthly payment and closing costs.

Use those days well. Line up the Closing Disclosure against your most recent Loan Estimate and check the loan amount, interest rate, monthly payment, closing costs and cash to close. If anything changed or looks unfamiliar, ask your lender why before you sign.

Compare offers and shop where you can

Getting Loan Estimates from several lenders can help you save money. To compare fairly, ask each lender for the same kind of loan with the same features.

On page 2 of the Loan Estimate, closing services are split into two groups: “Services You Cannot Shop For” and “Services You Can Shop For.” For the second group, you’re free to compare providers and choose your own. On your Closing Disclosure, check that any services you shopped for match the prices you agreed to.

Credit scoring models generally count several mortgage credit checks made within a short period as one inquiry. That period is 45 days for some models and 14 days for others, so if you do your rate shopping within about two weeks, it won’t hurt your scores any more than applying once. For help reading your Loan Estimates, a housing counselor at a HUD-approved agency can walk through them with you.

Ask about credits, and know the trade-offs

You may be able to negotiate a seller credit, where the seller contributes toward your closing costs. Keep in mind that the seller will usually want a higher price for the home to cover it.

A lender may also offer a lender credit, which offsets some closing costs. That usually means a higher interest rate, or a larger loan amount, in exchange. Just know that you’re still paying the costs, only in a different way.

Protect your closing money from wire fraud

Your cash to close is often sent by wire transfer, and scammers target that moment. They send emails that look like they come from your real estate agent or settlement agent, with “updated” wiring instructions that send your money to their account.

A few habits protect you:

1. Early on, write down the names and phone numbers of your trusted contacts, such as your agent and settlement agent. Talk with them in person or by phone about how you’ll send money.
2. Never follow wiring instructions from an email alone. Before you wire, confirm the account name and number by calling a number you already have, not one from the email.
3. Don’t send financial information by email.

If you think you’ve wired money to a scammer, contact your bank or wire transfer company right away and ask for a wire recall. Then file a complaint with the FBI’s Internet Crime Complaint Center.

Your next step

Before you apply anywhere, make a short list of two or three lenders you’d like to hear from. When you’re ready, ask each one for a Loan Estimate for the same type of loan, and set aside an hour to compare them side by side.