Hopefully I have given you a better understanding of what a closing (or settlement) is in yesterday’s post. Today I am going to talk about closing costs, and keep the discussion more toward the purchaser’s side of the transaction. You may be thinking “I’m paying all this money for my home, what the heck are all these other fees?” At closing you will be signing a mountain of documents, and some will show a breakdown of the cost of completing your real estate transaction. These costs are in addition to your down payment, minus earnest money deposit (you may have heard this also be called EMD, escrow money, or good faith money). Depending on the kind of mortgage you qualify for, your down payment can be as low as 0%. Starting with some of the general loan fees, you may find charges for a credit report, application, appraisal, mortgage insurance, homeowners insurance, interest, property taxes, special assessments, and loan origination fee. There could be more or less than what was just listed, many lenders will have their own requirements and fees. Keep in mind that you may not pay every fee listed by your lender either, depending on what was negotiated in your purchase agreement with the seller or between you and your lender. Regardless, you will be provided with a “Good Faith Estimate” where you will find what you are being charged for. Other charges that may be included in your closing costs are involved with your title company, government recordings, and transfer fees. This may include title search, title insurance, notary fees, document preparation fees, transfer taxes, and recording fees. Some other fees you may find depending on what was negotiated or what you decided to have done could include a land survey, pest inspection, lead based paint inspection, home inspection, mold inspection, etc. but are often paid before closing at the time of service. Keep in mind all your fees may fluctuate with the purchase price and location of your home as well. On average, your total closing costs will be between 2%-7% of the purchase price. Phew! It may seem a little scary and probably an overload of information! Please don’t let that deter you from purchasing a home. Many things can often be negotiated throughout your real estate transaction to end up with a reasonable price. Those helping you with this process are working with your best interest in mind! I hope that helps answer some questions! If you work in the industry and I have left some beneficial information out, please feel free to comment! Watch for tomorrows post about seller concessions…
Posted on: Tue, 18 Mar 2014 14:38:08 +0000
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