Common Closing Costs for Buyers

Real Estate transactions require a closing which is the point of time that a seller conveys the title of the property to the buyer. This is done through a sales contract which spells out the price and terms of the transfer. There are costs associated with this transfer which are called closing costs.

This amount varies per transaction but usually is 2-3% of the cost of the property. Closing costs can include fees charged by lenders, attorneys, appraisers, local governments for recording the deed. Ask your lender for these costs which are also referred to as a good faith estimate.

Common closing costs include the following items.

Title Search

Title Insurance for lenders

Title Insurance for Owners

Homeowner's Insurance

Courier Fees

Flood Zone Determination

Attorney's fees

Property Taxes and Mortgage Insurance

Transfer Taxes

Processing Fees

Recording Fees

Mortgage Underwriting

Discount points

Prepaid Interest

Property Tax

Termite letter

Homeowner's Associations Fees

Home Inspection

Buyer may get a home inspection to verify the condition of the purchase. - This is homeowner's association fees and information for the buyer and may require a transfer fee. - Lender may require a wood destroying insect letter (CL100) and repairs if needed. - Property Taxes due and prorated. - Money paid at closing to get interest paid throughout the first month. - Prepaid interest in a lump sum to lower your monthly payments. One point is one percent of your loan. - this cost covers loan approval research. - Your local government office (county or city) charges this fee to record the property in the public land records.- Your lender requires this fee to process your loan application- this tax is required when title passes to buyer from seller. - At least 2 months of property tax and mortgage insurance may be required at closing/ - Most lenders require an attorney to oversee the property transfer. - Determines if property is in a flood zone and if flood insurance is required. - Cost of document transport in the loan transaction. - Insurance that protects your home from possible damage. Most lenders require this at closing prepaid for the first year. - Insurance to protect the owner in case a third party challenges the proper's ownership. - Insurance to validate to the lender that the mortgage is a valid lien on a property's ownership. - the title company performs a thorough search of the property's records to ensure no other party has a claim on the property.

Closing Costs are a reality in real estate property transfers. It is important for a buyer to know these costs before the closing and be prepared.