What Exactly Are Closing Costs?

What Exactly Are Closing Costs?

 Great question and the answer to what costs apply to you really depends on what kind of loan you are applying for or if you're paying cash.  There are buyers and sellers closing costs and they are essentially the costs associated with the purchase or sale of a home.  You may also look at closing costs as fees associated with obtaining a mortgage.   Who pays each cost or fee varies by custom or state and a your Realtor or lender will be able to answer that question. The quick answer to how much the closing costs will be, at least in here in Northern Alabama is 2%-5% of the purchase price of the home.  Remember, if you're paying cash, there are fewer fees.

Some typical closing costs that you will see that are considered negotiable closing costs (before a contract has been executed) are: Brokerage fee, Title Insurance, Document Prep Fee, Termite Letter or Bond, Tax proration, Tax service fee, Underwriter's fee, Express Mail, Lender's Re-inspection fee, Appraisal fee, Title exam/attorney's fee, Credit report, Survey, Flood certification, Loan origination, Deed recording and Mortgage recording fees.

Other items paid at the closing table are known as Prepaid Items.  Your lender will require that you pay your first year Hazard Insurance up front as well as interest to the end of the month after the closing date.  There may also be funding fees or mortgage insurance/private mortgage insurance premiums depending on how much your are able to put down or the type of loan; VA, FHA, USDA.  Then there are escrow deposits, your lender will also require and collect at the closing table 2-3 months insurance and property tax payments in advance.

Not all of these items are considered closing costs, but they are costs/money accounted for and collected at the closing.  A good real estate agent can help you to pay less of these costs. 

If you need a knowledgeable real estate professional in Madison or Huntsville Alabama area, why don't you let me Google that for you! I also know outstanding agents in all states and Canada should you need help relocating to a new area.