Guide to Closing Costs
SELLER TYPICALLY PAYS FOR THE FOLLOWING:
DOCUMENTARY STAMPS ON THE DEED - State documentary fees on the deed that cost .70 cents for each $100 of purchase price.
REAL ESTATE COMMISSION - Based on preset limit at time of listing agreement.
BUYER TYPICALLY PAYS FOR THE FOLLOWING:
APPRAISAL - This is done to make sure the property has sufficient value to justify the loan. It normally costs about $275 - $300
CREDIT REPORT - The lender checks the credit history of the buyer. Cost is about $50
DOCUMENTARY STAMPS ON THE MORTGAGE - This is a state tax and applies to new and assumed mortgages. Cost is .35 cents for each $100 of the mortgage. ex. $350 for a $100,000 loan.
INTANGIBLE TAX ON NEW NOTE - A state tax of .20 for each $100 of new mortgage note
LENDERS TITLE INSURANCE - This protects the lender in the event of a problem with the title and typically costs about $125 to $175
OWNERS TITLE INSURANCE - This guarantees that liens or other encumbrances do not cloud ownership of the property. The cost varies with the value of the house. On a $100,000 the insurance would be approx. $725
PROPERTY SURVEY - This is done to make sure tat the borders of the property are clear, for example, a neighbors fence isn't on the land or a swimming pool isn't on a utility easement. This cost varies with the size of the land. $250 for an average lot to $375 for five acres.
RECORDING FEES - This is to pay the Title Company to record the Note and Mortgage Agreement in the courthouse records. The fee is usually about $45
RECORDING THE DEED - The price is based on the number of pages of the deed and normally costs $20 for a 2 page deed.
TAX SERVICE FEE - Possible fee paid to an independent company that checks courthouse records each year to makes sure that tax bills are paid on time to avoid liens being placed against the property. The one time fee is about $75
TERMITE, ROOF and HOUSE INSPECTION - TO make sure the house is not infested with wood destroying organisms, the roof is watertight, the structure is sound and the appliances are in working order. Cost depends on the size of the property and which inspections are required, usually about $150 for a condo and $400 for an average size house.
IN ADDITION SOME LENDERS MAY CHARGE THE FOLLOWING:
APPLICATION FEE - Covers the cost of applying for the mortgage. $100 - $300
ATTORNEY FEE - The lender rarely charges this. Generally $200 - $500 if charged
DOCUMENT PREPARATION FEE - $50 - $300
UNDERWRITING FEE - Some lenders may charge a fee for the underwriter to review the loan. $50 - $300
INTEREST AND INSURANCE FEES CHARGED AT CLOSING:
INTEREST - The new owner must pay interest for the days the house in owned in the first month before the regular payments begin. The fee is collected at closing. If the buyer has a $100,000 loan and pays 7.25% interest, that would be an amount of $19.86 per day.
PREMIUM MORTGAGE INSURANCE (PMI) - This applies to buyers who make a down payment of less then 20% and protects the lender if the borrower defaults on the loan. The fee varies with the amount of the down payment. Some lenders do not require mortgage insurance, but make it up in higher interest rates. Check with your lender.
HAZARD, WINDSTORM, and FIRE INSURANCE - The new owner must insure the property when there is a mortgage on the property. Insurance companies require the first year's premium in advance. The lender normally collects 4 months of payments. keeping two months of payment in escrow.
FLOOD INSURANCE - The same terms as above apply for homeowners in flood prone areas.
TAXES - When a deal closes, the seller must reimburse the buyer for the property taxes for the period of the tax year that the seller owned the house. The lender usually places that money, plus another three monthly payments, into an escrow account. This is to cover the period between the closing and the first payment, usually two months.
POINTS - Prepaid interest on a loan. Borrowers are assessed a fee of 1% of the loan, or one point, to cover the lender's admin costs. This is called an origination fee. In addition, borrowers can choose to pay a higher initial fee to reduce their interest rate. This is always negotiable.
Closing Costs can vary upon the lender, insurance companies, and other independent fees. These fees may vary between 1.5% to 5% of the cost of the house.