Closing Costs For Buyer

By Kaci Cooper, 23 Jan 17:43

When the time comes to close, you will be given a stack of paperwork which shows the line by line of every fee you encounter during your real estate purchase. Remember, these costs are in addition to your minus escrow money and down payment. And be forewarned, these costs will ad up to 3 to 5% of your total purchase.

When you go to complete your closing costs, or settlement costs, you need to bring a personal check or certified check. Beware that there may be additional fees than were originally discussed by your lender, such as attorney fees or title fees.

Below are the typical fees buyers must pay. Note, however, that not every buyer will pay every fee listed because they can sometimes convince the seller to take on some of the fees through negotiations. Also, different geographic areas charge different fees and not every lender will charge every fee shown.

Commissions
-The cost: typically 6 percent which is spit between both the buyer and seller’s agents
-Description: Payment for work the agent has accomplished. All of the real estate and broker fees are paid at the closing.
-Who pays? Usually the seller will pay unless it is a local tradition that the buyer pays or there was a deal to split the fees negotiated and written into the sales contract.
-Remember these costs are not included in your lender’s “good faith estimate.”

General Loan Fees
Loan Origination Fee: How much? Usually one percent of the total loan cost. This fee is referred to as a point or points, in which one point equals one percent.
Description: Lenders cover their administration expenses by charging up front.
Who Pays? The buyer, though there are some areas where there the seller will pay and there are some loans that do not have an origination fee.

Loan Discount
How much? Discount on interest.
Description: This refers to a one time fee charged by the lender or mortgage broker to lower the interest rate, and ultimately the mortgage payment. This means that paying points up front is very important because the more points you pay up front, the lower your interest rate will be. This also called a point or discount point, but it is important to remember that one point does not drop the interest rate on percentage point.
Who pays? The buyer pays unless a different arrangement has been made.

Application Fee
How much? The average cost is about $300, though there are some experts who charge up to $500.
Description: Most lenders charge an application fee or lender’s processing fee.
Who pays? The buyer pays.

Appraisal Fee
How much? Typically about $300. Though this fee can increase or decrease depending on the size of your property and the fees in your area.
Description: A bank usually higher an appraiser to check and see if the property is worth the price you have offered for it.
Who pays? The buyer must pay.

Credit Report Fee:
How much? Usually referred to as a “credit check fee,” this fee averages about $25 for every credit report checked, although some buyers will pay about three times this.
Description: the lender looks at your credit report and credit scores, which is a critical point in finding out how worthwhile it is to loan you money and how much.
Who pays? Buyer

Lender’s Inspection Fee
How much? Under one hundred dollars.
Description: If you are buying a home under construction or buying a new one, the lender may require it to be inspected for a fee.
Who pays? Buyer

Mortgage Insurance Application Fee
How much? Varies
Description: When the down payment costs less 20% of the purchase price, it is require that you carry Private Mortgage Insurance to protect the lender if you default on your loan.
Who pays? Buyer pays until equity reaches 20%. Remember that some lenders will have a cost for processing paperwork.

Assumption Fee
How much? Varies
Description: In some cases the buyer can take over the lender’s existing mortgage. In such case the lender will typically charge a fee.
Who pays? Buyer

Lender’s Attorney Fee
How much? Around $400.
Description: Expect to be charged if the lender chooses to involve an attorney.
Who pays? Buyer, though some buyers have balked successfully and lenders have withdrawn this fee.

Advance Loan Fees
How much? Varies
Description: The buyer may have to make these payments at closing.

Interest
How much? This will range from one to thirty days of interest.
Description: Most lenders will ask that the buyer pay the interest that will accrue within the first thirty days before the mortgage payment is due.
Who pays? Buyer

Hazard Insurance Premium
How much? A full year of hazard insurance premium payment.
Description: The policy protects the lenders against natural disasters destroying your home.
Who pays? Buyer

Flood Insurance Premium
How much? Varies
Description: Lenders may require flood insurance depending on the location of your home.
Who pays? Buyer

Earthquake Insurance
How much? Varies
Description: Depending on the region you live in, your lender may ask for earthquake insurance.
Who pays? Buyer

Reserve Account Funds
Description: Your monthly mortgage payments will likely include a fee for homeowner’s insurance and hazard insurance, as well as property tax.

Homeowner’s Insurance
How much? Two months worth of payments.
Who pays? Buyer

Mortgage Insurance
How much? Two months of mortgage insurance.
Who pays? Buyer pays.

City Property Taxes and County Property Taxes
How much? Two months of property tax.
Who pays? Buyer

Annual Assessments
How much? Two months’ payments
Description: Annual assessments of your property tax and homeowner’s insurance may be included in your monthly mortgage payment.
Who pays? Buyer

Title Charges

Title Search
How much? $200
Description: This is done to make sure there are not any mortgage payments or unpaid liens on the property.
Who pays? Negotiable

Title Insurance Fees
How much? Depending on where you live this cost can be as high as one percent of your total cost.
Description: This is an insurance policy for the owner to make sure that the title to the property is clear.
Who pays? Buyer, and keep in mind a separate fee may be included to protect the lender.

Documentation Preparation Fee
How much? $200 is the average fee.
Description: Lenders sometimes advocate this fee under the idea that it covers the cost of preparing final legal papers.
Who pays? Buyer. This is negotiable.

Notary Fees
How much? Varies
Description: This covers a sworn in notary who acts as a witness to show that the people who are stated as signing the documents actually signed them.
Who pays? Buyer

Attorney Fees
How much? Depends on the situation.
Description: In some areas the attorney handles the final costs.
Who pays? Buyer

Government Recording and Transfer Charges
These vary depending on state and county policies. It is also negotiable who pays them.

Recording Fees
How much? About $100.
Description: Covers the cost of getting the sale recorded in the public record.
Who pays? The buyer

Transfer Taxes
How much? Varies
Description: These might be hefty amounts in certain places. In some areas the government might require you to purchase tax stamps.
Who pays? Buyer

Miscellaneous Settlement Charges
Who pays these is negotiable and depends on the contract.

Survey
How much? About $1000.
Description: In some cases a lender will ask for a survey of the property.
Who pays? Buyer

Pest Inspection
How much? Varies
Description: Depending on your region, you may have to do a termite and pest inspection.
Who pays? Usually the seller will pay for this.

Lead-Based Paint Inspection
How much? Varies
Description: Covers cost of determining any lead-based paint risks.
Who pays? Usually the buyer

Courier Fee
How much? Varies
Description: If a courier picks up or delivers documents, then there will be a charge.
Who pays? Buyer

There are many fees associated with the closing of a home, but take each fee one be one so that you do not get overwhelmed.

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