We are always asked, what is involved for home buyers closing costs. Prior to closing, the buyer is presented with a closing statement which outlines all closing costs involved in purchasing a new home. This includes buyer and seller expenses and credits like prepaid taxes, down payment, taxes that are not paid yet, inspection fees, attorney fees, etc. The home buyers closing costs statement is provided to the buyer prior to closing so there are no surprises when the buyer gets to the closing table.

Now it is time to sign on the dotted line and the buyer is ready to sign the mortgage documents. These documents are highly important and state that if a buyer does not make payments on time, your lender can sell the property and charge a premium to do so. After all paperwork is signed, the buyer receives title to the home, provided by the seller, called the deed. The deed and mortgage are then recorded through public records making buyer the official new homeowner to the property!

 

Some steps are taken prior to closing:

Seller Side (seller, seller’s agent, seller’s attorney)
– Provide complete disclosures to the buyer
– Coordinate repairs requested from the buyer after inspection
– Order title

Buyer Side (buyer, buyer’s agent, buyer’s lender, buyer’s attorney)
– Schedule & attend the inspection
– Review all contracts & paperwork
– Complete a final walk-thru prior to closing

 

Understanding Closing Costs

Closing costs can vary from purchase to purchase but typically run between 3% and 5% of the total purchase price of the home. There are several items that closing costs pay for including fees required by the lender, escrow, appraisal, contractors, taxes, recording fees, survey, etc.

 

Common Closing Cost Fees

Appraisal Fee:
This is a requirement from the lender to determine the value of the property being purchased. This fee can range from $400 to $1,200 depending on the lender and the property being appraised.

Lender Processing Fee:
This fee accounts for the cost of processing the file for the loan and can vary in price.

Credit Report Fee:
The lender will charge credit reports to keep track of your credit history. This charge can vary from $25 to $100.

Escrow Fees/Title Company Fees:
The title company coordinates logistics of the sale such as the financials, paperwork, and acts as the “middle man” during the closing process and holds the money until the property closes and funds can be distributed.

Loan Origination Fee:
This fee pays for the lender’s administrative costs.

Homeowners Insurance Fee:
The lender requires that one year of homeowner’s insurance be paid up front, prior to or at closing.

Other Costs:
Taxes, insurance, recording fee, survey.

 

What Buyer Should Expect to Get at Closing

– Closing disclosure
– Mortgage or deed
– Sales contract & all mortgage documents
– Keys to the new home

Please note that charges vary between buyer, lender and the community the home is being purchased in. Please refer to your mortgage lender for more specific breakdowns on pricing.