What Costs Will I Pay At Closing?

Are you thinking about buying or selling a property?

If so, it's important to understand the concept of closing costs. Closing costs are expenses that both buyers and sellers have to pay when closing the deal on a property.

Closing costs can vary depending on several factors, including state laws and the property's purchase price. As a buyer, you'll be responsible for paying several fees, including those paid to the mortgage company for originating the loan, legal fees paid to the attorney who handles the real estate transaction, homeowners association fees, and pre-payments for homeowners insurance and property tax. On the other hand, sellers generally pay real estate commissions and title transfer fees.

Before closing, you'll be provided with a HUD-1 settlement form that itemizes the closing costs. It's crucial to review this document carefully to ensure there are no surprises or discrepancies. Moreover, as a buyer, you may be able to negotiate for seller concessions, which will reduce your closing costs by having the seller pay them.

Here are some typical closing costs that you should expect to encounter when buying or selling a property:

• A fee for the title search the title company conducts to determine whether there are liens and easements affecting the property.

• In certain states, a closing or escrow fee to the title company for managing the transaction.

• Attorney fees for review of escrow documents and mortgage loan paperwork.

• An appraisal fee for the lender.

• Prepayment of two months of property taxes, homeowners insurance, and mortgage insurance.

• Homeowners association transfer fees and first month’s dues.

• Mortgage application, underwriting, and origination fees.

• Per diem mortgage interest covers the time between closing and the first monthly payment date.

• Loan discount points paid to buy down the loan’s interest rate.

• A lender’s title policy.

• In some states, an owner’s title policy.

• Various fees for couriers, county clerk document recording, surveys, and miscellaneous other costs.

It's essential to keep in mind that closing costs will vary, and you can expect to get an idea of your final numbers over the last few days before you close on your house. Until that time comes, you can keep a rough estimate in your head by estimating the cost of the primary fees: appraisal and home inspection costs, varying mortgage application costs and mortgage broker fee, two months' worth of property taxes and homeowners insurance payments, title search, and lender's and owner's title insurance costs.

Understanding closing costs is a crucial part of the home buying or selling process.

By being aware of these costs and negotiating with the other party, you can potentially save a significant amount of money. So, be sure to review your HUD-1 settlement form carefully, ask your real estate agent about any questions you may have, and don't be afraid to negotiate for seller concessions. With these tips in mind, you can be confident in your ability to navigate the closing process and close the deal on your dream home.

Ready to find your dream home and save money on closing costs? Contact our team today for expert guidance!