The home buying adventure takes you into new territory. You’ll meet new people, have incredible experiences, and learn new real estate terms. Prepare ahead of time so that you won’t be confused by all the new terms. Even if you’ve heard the term closing costs, you may be unsure of what it means.
What are closing costs?
Expenses and fees for services paid during the home buying process are called closing costs. All fees and expenses are added together to come up with the final amount for the closing costs. There are times when the seller pays the closing costs, but you should expect to pay them on closing day. On closing day, you’ll sign paperwork, pay closing costs, and pick up the keys to your home. There are several people and businesses involved in putting together the closing costs.
Who pays closing costs?
The buyer is expected to pay the entire sum of the closing costs. As we mentioned previously, there are times when a seller will agree to pay all or part of the closing costs. The contract lists any conditions related to the closing costs. You could win favor points with the seller in a bidding war if you are willing to pay the closing costs without their assistance. Keep this in mind, and make sure you have substantial savings set aside for closing costs.
What is a good faith estimate?
You mortgage lender provides a good faith estimate at the beginning of the home buying process that includes a list of possible fees and expenses. Closing costs are usually 2 – 8 percent of the price of the property. This estimate will help prepare you for what’s ahead, but you can expect for the numbers to shift and change, sometimes substantially, by the time you reach the closing table. Before closing day, the lender will send you an accurate and itemized list of closing costs. Set up a meeting with your real estate agent to go over this paperwork. Check for errors or inflated fees. Bring anything questionable to the attention of the lender.
What kind of fees will I pay?
We can’t give you a strict list of expenses and fees that will be on your closing costs list, but we can offer you a good idea of what to expect. Fees for services vary due to different needs during the home buying process.
- Credit Report – The mortgage lender will use your credit report to help determine your credit-worthiness. The bank may cover the fees associated with this part of the process, but it could show up on the list.
- Attorney – An attorney provides legal services and will require payment for their time.
- Origination – The mortgage lender includes fees for the work they do processing your loan.
- Title Insurance – Title insurance protects against anything negative reported during the title search process.
- Title Search – We mentioned the title insurance associated with the title search. There are fees for running the title search. The title search makes sure there are no liens or problems with the title.
- Survey – A professional may be asked to survey the property to make sure the borders and size are listed correctly.
- Appraisal – A professional appraiser calculates an accurate number for the property’s value. This assessment assures the lender that they are offering the correct loan amount.
- Inspections – There will be more than one review completed during the transaction. Inspectors look at the structural integrity, systems, and make sure the area is free of pests.
Your real estate agent is the best source of information about the local community and real estate topics. Give the Debbie Hauert Group a call today at 321-303-9179 to learn more about local areas, discuss selling a house, or tour available homes for sale.