Closing Costs - what are they and how much

Real Estate

The 64,000 dollar question. What are closing costs and how much will they be…

 

Closing costs are the fees that both the buyer and seller must pay for services that they incur in the purchase. Buyer and seller closing costs are different with seller paying more than the buyer. Since the year 2000 when I became a realtor the amount for each side of the transaction has been pretty consistent. The sellers closing costs are between 5-7% of the sales price and the buyers closing costs are between 3- 4% of the sales price.

 buyers closing costs -

  Flood certification fee:   The certification verifies whether your property is in a federally designated flood zone.

Wire transfer fee:  This is the cost to transfer funds from one account to another.

 Homeowner’s insurance:   You are usually required to pay the entire first year’s insurance premiums at closing.

 Pre-paid interest:  This is the interest that will accumulate between the day of closing and the day the first payment is due, usually the first of the following month.

Up front mortgage insurance premium:   This is 2.25 percent of the loan balance, normally added to the balance of the loan. It is charged on FHA purchases of single family homes or planned unit developments.

 Mortgage insurance impounds:   As noted above, most lenders allow mortgage insurance monthly, but you might have to put two months’ worth of premiums into an impound account for a reserve.

Property tax impounds:  Depending upon when taxes are due determines how much you will have to deposit towards taxes to start up your impound account.

Non-recurring closing costs:

Escrow closing fee

Courier fee:   This is the charge for sending documents back and forth between lender and borrower.

 Homeowner’s association transfer fee:  This is the cost to transfer the membership from the seller to the buyer.

 Notary fees: around $40. This is to make the document signatures legal.

 Recording fees: $40-$75. Charged to record documents with county government recorder.

Sub-escrow fee:  The title insurance company usually charges this for dealing with the closing agent.

Title insurance:  You pay this to make sure you have clear title to the property. 

 

 

*** These fees vary for each transaction, based on lender, escrow company, area and purchase price. It is best to get a rough estimate breakdown sheet. The realtor can get that from an escrow company they work with.

 

*** If  you would like an estimated closing cost sheet to see how much yours might be on a home purchase give me a call at  818.394.0673