Understanding Closing Costs

Did you know this about closing costs?

That home buyers will pay 2-5 percent of the buying price of their homes in closing fees? Basically if your home would cost say $100,000, you may have to pay $2,000-$5,000 in closing costs.

What are closing costs?

These are costs that are not included in the buying price of your home to be. The miscellaneous fees paid to those involved with the sale of the house. They could either be incurred by the buyer or the seller.

What is included in closing costs?

Below are some of the costs you will probably have to off-set when closing your home.

  • Loan origination fees

This is an upfront fee, used as compensation for putting the loan in place and charged by a lender to process a new loan application for you. They are quoted as a percentage to the total loan usually between 0.5 -1 percent on mortgage.

  • Realtor fees

That lovely lady or gentleman that would show you open homes for sale will expect to take home a typical commission of 6
percent, which is split between the agent and the buyer and an agent for a seller. This is only paid by the home seller.

  • Appraisal fees

This are fees that your home has attracted due to where it is located, property and surroundings improvements and other
positive factors. These fees are often around $300-$500 depending on the specific property as of Dec 28, 2017.

  • Recording fees

These are fees charged by the county clerk to record documents in the public records. The fees varies with the county you are
in.

  • Title insurance

Protecting your home from unforeseen disasters, damages and loses is an important aspect in closing your home. The loan lender is also protected under private mortgage insurance in the case of a default by a borrower.

  • Taxes

This is used to divide property taxes equally between the buyer and the seller to time of use, or the closing date. Certificates are issued by tax service that shows the current years taxes, the last year taxes were paid and any late tax payment to be collected at closing.

  • Credit report charges

This shows the ability of the past loan applicant to pay the loan instalments. The charges may range from $30-$50. Lenders
in some cases may cover the costs themselves.

Why is it important to know your home closing costs?

As you shop around for your home, you would want to get the best quality but at the same time, at the best possible price, depending on your haggling skills. But having the information to help you get the best price on offer is recommended, and you’ll get it by comparing interests from lenders, prices put up by sellers, and other competing factors that would get you that opportunity. Knowledge is power; it comes at a cost only it’ll be cheaper when closing your home.