Financing-home loans, Real Estate

Closing Costs…what to Expect

Be prepared…when you find the home you love and put in an offer, remember that what you are putting down for the house is not the only cost you will have at the closing table.  Additionally, as a seller you have costs as well…don’t be caught off guard and be sure to talk to your agent and lender prior to your home search to get an idea of what these costs could be so that you are prepared.  Here are costs to expect:

Buyers:

  • Lender fees include charges for loan processing, underwriting, preparation and establishing an escrow account.
  • Third-party fees include charges for insurance, title search, and other inspections such as termites.
  • Government fees include deed recording and state & local mortgage taxes.
  • Escrow and interest fees include homeowner’s insurance, loan interest, real estate taxes, and occasionally private mortgage insurance.
  • ** An Earnest Money Deposit** this will have been collected at the time you make the offer and is held in escrow from the time the contract is ratified and held until closing.  This is an important part of your offer to purchase the home.  The EMD is typically 1.5-2% of the purchase price, so make sure to be prepared to write this check when you are putting together the offer.  This is your demonstration to the seller that you are serious and able to buy.  Additionally, the seller has something to hold on to if you default for a reason that is not outlined as a reason to void the contract in the terms of the contract.  It is also refundable if the contract is voided for reasons set forth in the contract.  If all goes well and no one voids, this money will be applied at closing towards the purchase of the home and will offset some of the costs you will be responsible for on the day of closing.

Sellers:

  • Title insurance fees depend on the sales price of the home.
  • Broker’s commission is a full-service fee and will cost anywhere between 6% to 8%.
  • Local property transfer tax, county transfer tax, state transfer tax, and state capital gains tax are the charges that you’ll pay for the privilege of selling your home. Credit to the buyer of unpaid real estate taxes for the prior or current year are variable and depend on when you close and when your taxes are due.
  • FHA fees and costs are all fees are now negotiable between a FHA buyer and seller.
  • Home inspections fees, while in most instances are paid for by the purchaser, are in some circumstances paid for by the seller and include pest, radon and other inspections.
  • Miscellaneous fees can accrue from correcting problems noticed during the home inspection.  These you will typically fix and pay for prior to closing, but some seller often offer a credit at closing intended to be used for correcting problems.

Purchasing and selling a home costs money, but the benefits of home ownership far out way the costs at the closing table…preparation is key…

Happy Wednesday!

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