Many people seem to have a love-hate relationship with real estate closings. Buyers may be extremely excited to get the keys to their new place – and sellers are glad to finally have the property out of their hands.
But then there are closing costs. Having to fork out the funds to cover these costs can really put a damper on the mood.
The best thing you can do is be prepared. Know who is responsible for the costs, how much they should be, and have enough to cover them.
What are Closing Costs?
Closing costs are the costs and fees associated with buying a home. As an example, the lender may require an appraisal and inspection before approving the loan – costs that will need to be paid as part of the transaction.
What’s more, there are fees required to handle the title work, the realtor’s commission, the post-closing recordation, surveys, and more.
Each of these fees is for things that help the sale to be processed and finalized, but they are not included in the sale. That means they cannot be rolled into the mortgage or paid at a later date, either.
When buying or selling a home, you will need to have extra money set aside to cover the closing costs, assuming you would like to see your transaction have a successful closing. On average, you can expect to pay about 3% to 5% of the sale price.
What is Included in Closing Costs?
The exact closing fees you will be responsible for will vary depending on the property you are purchasing, where it is located, the type of loan, and so on. However, a few of the most common closing costs you will likely encounter include:
- Appraisal fee
- Home inspection fee
- Title search fee
- Title insurance fee
- Escrow fee
- Credit report fee
- Prepaid interest
- Loan origination fee
- Homeowner’s Insurance
- Escrow deposit
- Courier fees
- Property taxes
- Transfer tax
- Recording fees
- Survey fees
- Underwriting fee
- Flood certification fee
This is just a general overview of all the closing costs you may encounter. Again, many of these fees are specific to the property and the loan and may or may not be required.
Buyer or Seller: Who Pays Closing Costs?
Whether or not the buyer or seller pays for the closing costs will vary from place to place, though it is not uncommon for both to be responsible for certain costs.
Closing costs in Maryland, for example, are paid by both the buyer and the seller.
Generally speaking, a buyer may be responsible for the following:
- Appraisal fee
- Home inspection fee
- Survey fee
- Title fees
- Escrow fees
- Recording fees and taxes
- Origination fee
And, a seller may be responsible for:
- Transfer taxes
- Certain title fees
- Realtor commissions (both)
Because there are no laws or regulations about who pays for what in real estate transactions, these roles are just customary. The parties can negotiate if desired.
Endeavor Title is an experienced title company. They guarantee that every client will leave the settlement table happy and satisfied.
