There are costs, that you will incur at the time of closing. That closing costs are various fees charged by those involved with the transfer of the property from the seller to the buyer. Some fees are paid by the seller; some are paid by the buyer. Who pays what is always negotiable. Do not ignore closing costs as part of your total purchase amount.
What the Buyer Typically Pays
- All fees to do with feeding the loan.
- Appraisal-to confirm the purchase price does not exceed market value.
- Home inspection - always have one to know what you are really getting.
- Pest inspection - required in most southern states because of humid climates, there are many crawl things that eat and destroy homes (termites, powder post beetles, flying ants, etc.).
- Homeowners insurance - typically prepaid for one year at closing.
- Mortgage insurance - if borrowing more than 80 percent of the value of the property.
- Survey-often not required, but it does make sure property boundaries are accurate.
- Property taxes - from the day of closing to December 31.
- Interest-mortgage interest paid from date of closing to thirty days before first monthly payment is due.
- Attorney fees-where applicable.
- Title insurance - yours and the lender - # 39; s.
- Escrow fees - if you or the lender choose to escrow any of your taxes or insurance.
- Loan discount points - if you paid for a lower interest rate.
- Fee for recording the documents.
- For example, $ 1 per $ 1,000 of selling price. Check with your county, not state, to find out your rates.
Typical Closing Costs and Their Definitions
Appraisal Fee The appraisal fee is paid to an appraiser to obtaining an estimate of market value of the property.
Attorney Fee - Attorney fees are paid to the closing attorney or title Company for closing the transaction.
Credit Report - An evaluation by a credit bureau of the buyer & # 39; s credit habits.
Hazard Insurance - Insurance that protects a property owner against damage raised by fires, severe storms, earthquakes, or other natural events. Typically, the buyer will be required to pay for a year & # 39; s worth of premiums at closing, but this will depend on the exact details of the policy.
Inspection Fees - There will also be a fee for any inspections the buyer wants including: septic inspection, termite and pest inspections, mold, radon gas, etc.
Loan Origination Fee A point is equal to one percent of the loan. For example, on a $ 100,000 home, a point is $ 1,000.
Mortgage Insurance This cost may range from a half percentage to 1 percent per year and fourteen months premium is often collected at closing. This is coverage for the lender in case of default .
Prepaid Interest - Mortgage interest from the date of closing to thirty days prior to the first regular mortgage payment.
Recording Fees - Charges by the County Recorder to record documents required to clear or transfer title.
Survey - Shows boundaries of either piece of real estate, whether buildings or other improvements are actually on the property, and that surrounding buildings or improvements do not encroach on the property.
Tax and Insurance Escrow - If the new loan is going to have an escrow account, the lender will be required from two to ten months payments to be deposited at the time of closing, depending upon when the next taxes or insurance need to be paid out of the escrow account.
Title Examination Fee - Cost to review the title to the property for liens, mortgages, easements, or defects.
Title Insurance - Cost of title insurance is based on the loan amount or purchase price and is required by most lenders. The cost depends on the amount of the loan for a lender & # 39; s policy, or the purchase price for an owner & # 39; s policy. A lender & # 39; s title insurance policy does not insure owners.
If above paid at closing, meaning this money must be readily available. If roled into the loan these fees, plus interest, will be paid over time.
Calculating Your Closing Costs
When calculating your closing costs, always start with your purchase. This is where the amount you need need readily available begins to add up.
Costs vary from area to area and transaction to transaction, so consult your local real estate agent or attorney to find out which fees you are responsible for based on your purchase price. Again, many of these fees are negotiable as is who will pay them, buyer or seller.
Anything you can add about closing costs?
