Worked example: Closing Cost in Kentucky

Example inputs

This worked example shows how DocketMath can calculate a closing cost figure for a transaction in Kentucky (US-KY) using jurisdiction-aware rules tied to Kentucky’s general limitations period.

Because “closing costs” can mean different things depending on what you’re modeling (for example, lender fees, settlement line items, or other claim-related costs), this example focuses on the time-based rule input that DocketMath uses for Kentucky: the general statute of limitations (SOL) period. This is a practical way to show how the tool applies Kentucky’s jurisdiction-aware time window in a consistent, repeatable calculation.

Jurisdiction rule used (Kentucky)

Kentucky’s general/default SOL period is:

• 5 years under KRS 500.020, which sets the general limitation period.
• Per the project note: No claim-type-specific sub-rule was found for this scenario, so the general/default period applies rather than a shorter or longer specialized period.

Example scenario (inputs you can tweak)

In a closing-cost style calculation, time frequently affects interest accrual, carry costs, or the duration over which a cost driver is applied. For this example, assume the closing cost model includes a time component that uses the SOL duration as the lookback/period for pricing the cost driver.

Use these starting inputs:

• Jurisdiction: Kentucky (US-KY)
• General SOL period applied: 5 years (from KRS 500.020)
• Start date (for the model’s period): 2024-01-15
• End date (derived using the SOL period): 2029-01-15
• Annual cost driver rate: 3.25% (an assumed carrying/interest-like rate for modeling)
• Principal / base amount: $250,000
• One-time closing fee component: $1,800
• Monthly cost driver application: yes (the model assumes compounding by month)

How to interpret the “time window”

This example uses 5 years as a period length derived from Kentucky’s general SOL (KRS 500.020). The end date is calculated by adding 5 years to the start date, and that feeds the interest/carry component of the closing-cost figure.

If you change the start date, the end date changes as well—but the length remains 5 years in this default scenario. If you change inputs like the annual cost driver rate or the principal, the final modeled number changes because the carry component is recalculated over the same time window.

Example run

Here’s the walkthrough of how you would run this in DocketMath for closing-cost in Kentucky (US-KY).

Run the Closing Cost calculator using the example inputs above. Review the breakdown for intermediate steps (segments, adjustments, or rate changes) so you can see how each input moves the output. Save the result for reference and compare it to your actual scenario.

Step 1: Confirm the jurisdiction-aware SOL setting

DocketMath applies the general/default SOL for Kentucky:

• SOL duration: 5 years
• Authority: KRS 500.020
• Defaulting logic: No claim-type-specific rule found → use the general SOL period.

Step 2: Establish the model time range

Using the inputs above:

• Start date: 2024-01-15
• SOL period: 5 years
• End date: 2029-01-15

That equals 60 months (because the model uses monthly compounding in this worked example).

Step 3: Compute the time-dependent cost component

Assume the cost component is calculated as a compounding “carry” on the base amount.

Inputs:

• Base amount: $250,000
• Annual rate: 3.25%
• Monthly rate: 3.25% / 12 = 0.270833…% per month
• Months: 60

Monthly compounding factor:

• ( (1 + 0.0325/12)^{60} )

Modeled carry/cost component:

• ( $250,000 \times [(1 + 0.0325/12)^{60} - 1] )

Approximation (rounded):

• ( (1 + 0.000270833)^{60} \approx 1.0164 )
• Increment ≈ 1.64% over the 5-year period
• Carry component ≈ $250,000 × 0.0164 = $4,100

Step 4: Add one-time closing fee component

• One-time closing fee: $1,800
• Total modeled closing cost:

  • $4,100 + $1,800 = $5,900

Result (example output)

Estimated closing cost (Kentucky default SOL-based time window): $5,900

• Time-dependent carry component: ~$4,100
• One-time fee component: $1,800

If you want to reproduce the calculation in DocketMath, use the closing-cost tool: /tools/closing-cost.

Gentle disclaimer: This is an illustrative worked example to show how the jurisdiction-aware SOL input affects a modeled output. It is not legal advice.

Sensitivity check

Change one input at a time to see how the output reacts. In this worked example, the main drivers are:

1. The SOL-based time window (fixed at 5 years in this example)
2. Annual cost driver rate
3. Principal/base amount
4. Monthly compounding (the model assumes monthly compounding)

1) Rate sensitivity (keep principal at $250,000; keep 60 months)

Using the same model structure:

*Totals include a fixed one-time fee of $1,800.

Takeaway: A higher annual driver increases the carry component, and because the model compounds over 60 months, the modeled closing cost can move by thousands of dollars.

2) Principal sensitivity (keep rate at 3.25%; keep 60 months)

Because the carry component is proportional to the base amount, scaling is close to linear in this structure:

Takeaway: If your base amount increases, the time-dependent portion rises roughly proportionally, while the fixed $1,800 fee stays unchanged.

3) Time-window sensitivity (what if the SOL period were different?)

In this specific example, DocketMath uses general SOL = 5 years under KRS 500.020, and no claim-type-specific rule was identified.

Mechanically, if the SOL-derived time window changes:

• Shorter window (example: 3 years instead of 5): fewer compounding periods (36 months vs. 60) → lower carry component.
• Longer window (example: 7 years instead of 5): more compounding periods (84 months vs. 60) → higher carry component.

Takeaway: When the model derives its time component from KRS 500.020’s general SOL, the output is tightly coupled to that SOL duration.

Related reading

• Average closing costs in Alabama — Rule summary with authoritative citations
• Average closing costs in Alaska — Rule summary with authoritative citations
• Average closing costs in Arizona — Rule summary with authoritative citations