Closing Costs What Are They And Who Pays Them?

Closing Costs What Are They And Who Pays Them?

 Closing Costs What Are They And Who Pays Them? Is a good question since a lot of confusion revolves around them.  Buyers and sellers have their own closing costs and they and they can be simply viewed as the costs associated with the purchase or sale of a home.  Closing costs paid by the buyer vary between states, but typically include: loan origination fees, title insurance, flood certification, state tax/stamps, appraisal and more.  The seller's closing costs involve fewer line items, but can be substantially more.  Sellers closing costs not only involve brokerage fees, but can also include, a Deed preparation fee, full or half Title Insurance /binder fee, home warranty if included, power of attorney, non-current home owner association fees, taxes, etc.   Who pays each cost or fee varies by custom or state and your Realtor or lender will be able to answer that question. The quick answer to how much the closing costs will be, at least here in Northern Alabama is 2%-5% of the purchase price of the home and remember, if you're paying cash, there are fewer fees associated with a home purchase.

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.

I've often been asked if the buyers closing costs can be rolled into a mortgage and the short answer is no, however, what's done sometimes is that the purchase price of the home will be increased to cover closing costs and the seller will pay them.  The hurdle is that the house must appraise at or above the increased purchase price

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.