Buying a house provides you with a sense of pride and accomplishment. You’ve worked hard to get to this place. You’ve saved money, made sure your credit is positive, and now is the time to move forward with the home buying process. During your experience with buying a home, you will hear many new real estate terms. A term that you’ll hear often is closing costs.
What are closing costs?
The sum of all the fees and expenses accumulated during the process of buying a home is known as the closing costs. When closing day arrives, you are expected to pay this amount unless another agreement is made with the seller. While your lender will put together the list of fees as they occur, there is no one person or business responsible for determining the fees. There are inspectors, appraisers, and attorneys involved in the process. Each of these services has a fee.
Who pays closing costs?
You are expected to pay the closing costs in their entirety unless you have an agreement with the seller that says otherwise. If you do, there will be a contract with these terms included. There are times when the seller agrees to pay some of all of the costs. Don’t count on this as you move forward. Being prepared to pay the costs may give you the upper hand during negotiations if your offer comes up against competition.
What is a good faith estimate?
At the beginning of the home buying process, the lender provides a good faith estimate that gives you an idea of what to expect. The amount is typically between 2 – 8 percent of the selling price. This is an estimate and should not be counted as the final sum because it’s possible that the amount can increase substantially by closing day. The lender will deliver an itemized list prior to closing day that you can go over with your real estate agent. Look for any errors and report charges that you feel are excessive.
What kind of fees will I pay?
There is no hard rule on what services you’ll need during the home buying process. Here is a list of possible services and expenses that may be added to your closing costs. Keep in mind that this is not a complete list, but it will shed some light on what to expect.
- Credit Report – Some lenders cover the cost of running your credit report, but don’t be surprised if you see a charge for this service.
- Attorney – You may need the help of an attorney during the transaction. There will be fees associated with their services.
- Origination – The mortgage lender provides services for completing paperwork and processing your loan.
- Title Insurance – Title insurance is in place for protection in the event that something comes back wrong with the title.
- Title Search – A title search is completed to ensure that nothing is wrong with the title and there are no liens.
- Survey – A professional may be hired to survey the property to ensure that the borders and the size of the property are listed correct.
- Appraisal – A professional appraiser is secured to ensure that the property value is correct.
Inspections – There may be several different inspectors hired to investigate things like pests, structural integrity, and systems.
The best source of information about local communities and real estate topics is your real estate agent. Contact Yamel Ramirez Maynard at 818-732-1475 or Rob at 818-917-8060 to learn more about the area, to discuss selling your house, or to tour available homes for sale.