When buying or selling your home all buyers and sellers incur closing cost associated with the transaction. Normally, closing cost (need to include commission and if 5% down payment) are about 8% to 12% of the property purchase price depending on the type of transaction, other than full cash transaction which may be less. Shortly after signing a contract between a buyer and seller of property, many lenders are willing to provide a good faith estimate of proceeds involved in the transaction. Your real estate agent should be making that request for their client. The final closing disclosure of cost should be received by the buyer and seller 3 business days prior to closing. It is important to provide the buyer and seller a reasonable estimate ahead to avoid sticker shock. Types of fees included in closing cost: Origination fee which is a fee charged by the lender to process application and underwrite it. This fee is approximately 1% of borrower’s mortgage. Service charges include appraisal, survey, inspections, credit report, flood report, title search, and insurance. These fees may vary, and it is good idea to shop around, but understand what you are getting for your money. Commission – amount paid to the real estate agent for assisting the client with the transaction. This amount is normally paid by seller. Transfer taxes and recording fees: These fees will vary from area to area. The state is not concern who pays these fees providing they receive the money. Escrow items: Other fees that would be included into closing cost: homeowners association, homeowners insurance, property taxes and mortgage insurance. When a buyer purchases a home and makes a 5% down payment, they will need approximately 7.5% available cash to cover closing cost, and down payment.
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