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What is the Cost of Closing

The last phase of home buying is called the closing day. This is the time when the buyer can start calling the property as his or her own. But before doing this, certain things need to be done like completion of all required documents and signing them. However, the most sensitive part in any closing transaction is the settlement of the closing fees.

The Cost of Closing

Before a transaction can be deemed closed, the fees incurred should be paid. The buyer and the seller owe money to different parties like attorneys, Title Company, the government, agents and their respective lenders. Whatever debt there is must be satisfied so that the property can be transferred with a clean title.

So what is the cost of closing? Read on Further.

Fees Incurred in Getting a Loan

Most buyer get loan to pay-off the house in an installment basis. Therefore, buyers seek help from financial institutions to obtain a loan.

The granting of loan involves certain process. As the lenders perform these processes, they end up incurring cost that is then shouldered by buyer.

Fees that are expected to pay under this category are: 

  1. Administrative fees- This refers to the cost incurred for underwriting and processing of the loan.
  2. Application fees
  3. Appraisal Fees- The amount lenders have to pay to have houses appraised.
  4. Broker's Fee- Some people seek the service of a mortgage broker, in obtaining the loan. This will be the charge for covering this service.
  5. Courier Fee- Documents may be delivered to the escrow agent. The buyer shoulders the charge for courier
  6. Credit Report Fees- Every borrower is screened for their ability to pay. Credit report helps lenders to do this.
  7. Inspection fees- The condition of the property needs to be investigated to determine the repairs needed or any risks and threats to the borrower.

 

Fees for Determining the Legality of Selling the house

One needs to pay for the service of to ascertain that the transfer of ownership would not have future problems. Here are fees to cover such service: 

  1. Title Fees- This fee covers for the determining if the house is free of any lien or any restrictions.
  2. Notary Fees- Any document generated must be notarized to prove the signatories worthiness to sign.
  3. Lawyers Fee- Most buyers and sellers would seek the help from a lawyer, to prepare the documents needed. They may also appoint the lawyer as the closing agent. This fee should cover for it.
  4. Title Insurance fees- This insurance is very important to protect the buyer from any defects of the title.
  5. Recording Fees- Any transfer of ownership should be recorded in the County Clerk's Office. This should cover for that service.

 

Pro-rated Fees between the Buyer and Seller 

Before the seller transfers the property to the buyer, he or she needs to pay for a portion of fees they owned during their ownership. Here are some examples: 

  1. Property Tax- The seller may owe taxes, although it is not yet due. Seller should pay this in advance and the fee gets included in the closing costs.
  2. Home Owner's Fee
  3. Utilities Expenses

 

The closing agent is tasked to disclose all these fees on the HUD1 form. In addition, all of these fees are paid upfront together with the down payment.

Buyers and Sellers should prepare for the cost of closing. Doing this ensures a smooth flow of transaction.

About the Author:

The most beautiful neighborhood you can live in is just one click away. And they can only be found from these sites Litchfield Park Real Estate, Mesa Houses for Sale and New River Realty.

Author: Katrina Marie Santes
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