You have scheduled a date to close on your new home. You’ve almost reached the finish line, but there is one more item to address before you can celebrate: closing costs.
Closing costs are fees paid at the end of a real estate transaction when the title of the property transfers from seller to buyer. Either party pays for closing costs.
Closing costs range between 2 to 5 percent of the property’s purchase price. For example, closing costs on a $200,000 house will be from $4,000 to $10,000.
The law requires lenders to provide you a Loan Estimate within three days of receiving your loan application. The Loan Estimate will include estimated closing costs; however, the costs may change by the time you close.
At least three days before closing the lender should provide a Closing Disclosure statement outlining all closing costs. Ask your lender to explain each line item in your closing costs. Often, fees toward closing costs are negotiable or even unnecessary.
Closing costs are expenses beyond the price of the property. These costs may include, but are not limited to:
•A loan origination fee, which lenders charge for processing the loan paperwork.
•Discount points, which are fees paid in exchange for a lower interest rate.
•Charges for any inspections, required or requested, by the lender or buyer.
•Title insurance to protect the lender from claims against the house.
•Title search fees, which confirm the property is free of unpaid mortgages or tax liens.
•Recording fees charged by local government to record sale of the property.
A no-closing cost mortgage eliminates upfront fees for the buyer at closing. While this type of mortgage is beneficial in the short term, the lender may charge a higher interest rate or wrap the closing costs into the total mortgage.
Contact our staff of title professionals to request a reliable and competitive estimate of your title insurance and closing costs.