Understanding Buyers Closing Costs
There are typically three main parts to every financed home closing:
- Loan Fees
- Pre-Paid Fees
- Government and Title Fees
The loan fees can and will vary, sometimes greatly, from lender to lender so it is worth to shop around for your mortgage. These fees include loan origination/application fee, appraisal fees, underwriter fees, credit report fee, prepaid interest, flood certification fees, etc.
Pre Paid Fees are items you get the benefit of, but have to pay up front at closing. This would be pro-rated HOA fees, county taxes, funds to start your escrow account to pay your property taxes and homeowners insurance. Some lenders will also require that you pay for one years worth of homeowners insurance in advance so you always have coverage.
Government & Title Fees
Government Fees include recording fees, stat tax/stamps on the mortgage to the state and intangible tax to the state. The seller typically pays the fee on the deed, but that can be a buyers expense if that is how it is notated in the contract. Title fees include settlement fees to title company (their fee to handle closing), owners title insurance, lenders title insurance, title endorsements, title search fees, survey fee, estoppel fee (if there is an HOA on property), and lien searches.
If you are paying cash for your closing....
If you have the ability to pay cash for your new home, you will essentially save thousands of dollars on your closing because there are no lender fees. Lender fees are typically the most expensive part of a financed mortgage closing. With cash there is no lender to deal with and thus no lender fees. You will still have some pro-rated property taxes, county taxes and HOA (if applicable) fees to take care of as well as the government and title fees. But you are not required to get an appraisal nor a survey on a cash purchase so those fees are gone as well.
Call us today and we can help further explain your closing costs and even get you numbers from title on what you can expect to pay on a particular property.