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Origination fees, processing fees, homeowners' association fees and taxes are among costs homebuyers may face at the closing table.

The closing process can be complex and expensive, but it doesn't have to be surprising, say mortgage brokers, who recommend that buyers learn about various closing fees and ask questions.

"If you have a question, ask, is the big thing," said Amy Flint, a lender and broker with GMAC Mortgage. "There shouldn't really be a lot of surprises in prices if lenders disclose properly and if you have asked about things you're not sure about."

Closing costs are broken down into two basic categories: Lender/broker fees and third-party fees.

Costs associated with the lender and/or mortgage broker include charges for origination, underwriting and processing loan documents.

Third-party costs include fees for appraisals, inspections and certifications, and credit reports. Lenders tend to choose from an approved list of appraisers.

Third-party costs also include homeowner's insurance and interest and/or mortgage payments as well as other prepaid items, such as hazard insurance and property taxes, which are deposited into an escrow account with the lender.

The lender or mortgage broker will estimate most of these fees in a Good Faith Estimate, required by the Real Estate Settlement Procedures Act within three days of a loan application.

The document provides buyers an educated guess about fees at closing. Exact fees will be itemized in the HUD-1 Settlement Statement, which should be available at least one day before closing.

Aside from some title fees paid by the seller, buyers should expect to pay most closing costs. Real estate closing fees to the title company typically are split between the buyer and seller, Flint said.

Some estimates may be more accurate than others, and Good Faith Estimates may not include fees unknown to the mortgage broker.

Kelly Bohmer, a mortgage broker with Highlands Capital Group, recently had clients who were upset that they owed $1,600 in HOA dues at closing.

Flint, who has had similar experiences, said buyers typically can find out about any HOA dues near settlement time from the real estate agent or title company.

"HOA fees in general are one of the most surprising categories because you really don't know until you get closer to closing," she said. "You can find out ahead of time, but that's usually not something the broker does."

HOA fees typically fall into two categories: Upfront dues, which depend on the closing date and working capital, which new HOAs sometimes collect for emergency reserves.

Owners typically get the money back when they sell, Flint said.

Escrow accounts, which can require three to six months of property taxes, are another cost buyers tend to forget until they see it in the Good Faith Estimate or at closing, Bohmer said.

In general, closing fees can range from $3,000 to $5,000 -- roughly 2 to 3 percent of mortgages between $100,000 and $200,000, he said.

Buyers may finance closing costs by requesting a 103 percent loan or asking the seller to raise the purchase price and credit money back for closing costs, Bohmer said.

Sellers only can pay non-reoccurring or non-prepaid costs. Other terms vary with different loans.

Lenders and brokers don't have much control over third party costs, but they do have more say in their own fees.

That's why, in addition to comparing rates, it's important to compare costs charged by each lender when shopping for a loan.

Buyers should be aware that names for fees related to processing, underwriting, document preparation and administration may vary from lender to lender, Flint said.

Mortgage brokers and lenders make money from the loan origination fee. The fee, usually about 1 percent of the loan, is classified technically as prepaid interest because it's paid upfront at closing, Flint said.

Whether lenders and brokers quote interest rates that assume an origination fee varies throughout the United States.

In Colorado, most lenders' and mortgage brokers' quotes assume the fee. In New York, it's standard to quote a higher rate with no origination fee, she said.

"Whether it's smart to pay the origination fee upfront or roll it into the interest rate is a math question," Flint said.

In general, financing origination costs into the interest rate can be a smart choice for buyers planning to sell or refinance in three or four years. That's about how long it will take for the difference in monthly payments to break even with the origination fee.

To get an idea about how the two scenarios will affect closing costs, it's a good idea to request two Good Faith Estimates, one with the origination fee and one without, Bohmer said.

There are other measures buyers can take to prevent surprises or problems in the home-buying process.

For example, it's important buyers verify their rate if they do not lock in at the time of the quote. Buyers also need to confirm their lock-in period so their rate doesn't expire and possibly change before closing, Flint said.

Most standard loan programs lock in rates for 60 days, though special programs or new construction lock in periods might be longer, she said.

Another reason a rate may change is if a lender discovers new information, typically about a buyer's credit or income, not disclosed in the loan application.

"It's a really good idea to tell your broker everything upfront," Flint said. "Trying to hide something to make you look like a better prospect for a loan won't help you in the end. They (lenders) usually will find out about it."

At lock-in time, buyers also need to confirm whether their loan carries any prepayment penalties and, if so, when those penalties expire.

Overall, education is the most important tool for navigating closing costs and the home buying process, said John Carson, Regional Director for the U.S. Department of Housing and Urban Development in Denver.

"The best advice I can give is work with a housing counseling agency, particularly if you are a first-time homebuyer," he said.

Classes addressing various home buying topics are offered by HUD-approved housing counseling agencies in Glenwood Springs, Grand Junction, Fort Collins and other areas in the state. For more information, go to www.hud.gov/offices/hsg/sfh/hcc/states/colorado.txt

HUD also has a hotline for housing questions: 1-800-543-9378 ext. 105.

Additional information about settlement procedures and costs is available at www.hud.gov/offices/hsg/sfh/res/respa_hm.cfm

-- To reach Tamera Manzanares call 871-4204 or e-mail tmanzanares@steamboatpilot.com