When buying a home, you know you should expect to have a certain amount of money saved for a down payment. But have you stopped to consider how much you’ll need to have set aside for closing costs? Here we’ll break down the fees associated with closing on a home.
As top real estate professionals, The Begley Team, we will always prepare what we call a “net sheet” for our clients. This is an itemized spreadsheet with all the closing costs. This will help you understand the numbers and a break down of the different closing costs in your transaction. This varies for buyers and sellers, we will always personally tailor it with your unique transaction. We don’t want you surprised by anything and we are always there to answer any of your questions. If you are out of our area and using another Realtor, ask them to do this for you.
What are closing costs?
In a nutshell, closing costs are those fees charged by third parties who are involved with the sale of a home. These can include your lender, the title company, local government offices and escrow charges.
Who pays the closing costs?
In general, both buyers and sellers are responsible for paying the closing costs. However, buyers typically pay a larger percentage than sellers – around three percent. While most of the fees are paid during closing, some are paid upfront, such as the inspection fee.
What are the fees due at closing?
The fees associated with closing can vary depending on where you live, but these are some of the costs you’ll most likely encounter:
- Application fee paid to the lender to process your application.
- Appraisal fee paid to the appraisal company assessing the value of the home.
- Closing fee paid to the title or escrow company.
- Courier fee paid to companies transporting documents.
- Credit report fee paid when your lender reviews your credit to determine the interest rate on your loan.
- Home inspection fee paid to the inspector verifying the condition of the property.
- HOA transfer fee paid by the seller to verify payments are current.
- Homeowner’s insurance fee paid to insurance company to cover first year’s insurance.
- Origination fee paid to lender to cover administration costs.
- Prepaid interest fee paid to lender to cover interest that will accrue between closing and the first payment on your mortgage.
- Private Mortgage Insurance (PMI) fee that is levied if you put down less than 20 percent for your down payment.
- Property tax fee paid to lender for any taxes due during the first 60 days of purchase.
- Recording fee paid to the local recording office for public records.
- Title search fee paid to a title company to search the property’s records.
- Transfer tax fee paid when the title is transferred from the seller to the buyer.
- Underwriting fee paid to lender for research involved with approving your loan.
Can you estimate the closing costs?
When your lender provides you with a loan estimate, they will also include what your closing costs are expected to be. However, understand that these numbers are an estimate and can change. You can also check out this online calculator that will help you determine what your closing costs may be. Before your closing date, your lender will give you a Closing Disclosure statement, which will outline what the final closing costs will be.
The Begley Team will always prepare what we call a “net sheet” for our clients. This will help you understand the numbers and a break down of the different closing costs in your transaction. This varies for buyers and sellers, so we will always personally tailor it with your unique transaction. We don’t want you surprised by anything and we are always there to answer any of your questions.
Compliments of Brandon Begley | The Begley Team | Berkshire Hathaway California Properties | Demand Excellence | Over 1,600 homes sold since 1975 (818) 368-0290 | www.BegleyTeam.com | Voted top Los Angeles REALTORS® by Los Angeles Magazine- 2012, 2013, 2014 & 2015