When you purchase a home, you’ll have to pay closing costs: These fees, paid typically to a title company are to facilitate the sale of your home.
The term “closing costs” is a catch all phrase for fees associated with the purchase of a home outside the sale price.
You are probably wondering who pays closing costs. Well buyers and sellers share in covering these costs. Buyers cover most of these costs since many of them are related to obtaining a mortgage.
Here are some of the fee’s buyers will pay to purchase a home.
- Home Inspection.
- Home Appraisal.
- Loan origination fee – which lenders charge for processing the paperwork.
- Underwriting fees.
- Title Search – Looking for liens that could interfere with your ownership.
- Survey fee.
- Credit Report.
- PMI Private mortgage insurance – If the buyers down payment is less than 20%.
- Discount points, or mortgage points – fees paid for a lower interest rate.
- Document recording fees- This covers the deed and mortgage.
- Escrow deposit -typically two months of prepaid property taxes and mortgage insurance.
Here are some fees sellers are typically responsible for:
- Closing fee – paid to title company.
- Taxes on the home sale.
- Fee for transferring title to the new owner
As you can see the future homeowners are responsible for the bulk of the closing costs. These costs generally range from 1.2% to 2% of the home’s purchase price. So, for a $200,000.00 home, the closing cost would range from $2400.00 to $4000.00. This amount plus a down payment for the buyer. Of course, speak with your lender to make sure you understand how much you are expected to bring to closing. Stay tuned for ways you might be able to reduce your closing costs on your next home purchase.
R. jones
