Closing costs are a necessary part of a real estate transaction. But these fees differ depending on which side of the table you sit. Buyers have a greater number of closing costs compared to the seller, however some of these fees are often negotiated in the real estate deal. (For instance, a seller may agree to contribute a certain amount towards the buyer’s closing costs.) Read on for a breakdown on the fees appearing on the buyer’s side of the Closing Disclosure (CD) form.

 Understanding Buyer’s Closing Costs

According to Realtor.com, closing costs are usually between 2% and 7% of the amount of the home. These costs also vary based on the type of mortgage you choose or for which you qualify.

Buyer’s closing costs typically include the following items:

• Loan Application: Amount varies per lender, and covers the administrative cost of processing your loan application.
• Home Appraisal: Applies to every real estate transaction involving a lender, and provides an objective estimate of the fair market value of the home.
• Land Survey: Optional – only ordered upon request by a buyer or agent. Describes the boundaries and other pertinent details of the property.
• Credit Report Review: Charged by the lender to ensure good credit status.
• Flood Determination: Performed by the lender to determine if the property falls within a flood zone.
• Flood Elevation Certificate: May be required if it’s determined that the property is, in fact, located within a flood zone.
• Attorney Fee: Applies only if you hire an attorney versus a settlement company to handle your closing.
• Homeowner’s Insurance: Applies to every transaction with a lender.
• Flood Insurance: Often required if the property is located within a high risk flood zone.
• HOA Assessment: Charged if the property is part of a homeowners’ association, and is typically prorated.
• Prepaid Interest (Loan Discount Points): The amount of interest that accrues between your closing date and the first loan payment. Loan discount points reduce the interest rate on your mortgage. 
• Private Mortgage Insurance (PMI): Typically required if the down payment is less than 20 percent. Certain mortgage products require PMI for the life of the loan.
• Lender’s Title Insurance: Protects the lender’s interest if title problems arise surrounding the property.
• Origination Fee: Charged by the lender, and covers the cost of creating the home loan.
• Courier Fee: Amount charged by some lenders for document delivery throughout the real estate transaction.
• Recording Fee: Varies by city or county, and charged for public recording of the real estate sale.
• Transfer Taxes: Charged by the city, state or county to cover the cost of transferring title on a property.
• Underwriting Fees: Amount charged by the lender to evaluate in depth your ability to repay the home loan for which you’ve applied.
• Title Company Closing Fee: Amount charged by the title company to conduct the real estate transaction.

*Some types of mortgages may include fees specific to those products. Closing fees and their amounts may vary per state and/or municipality.

Have questions on how closing costs are determined, or about the settlement process in general? We’re happy to help! Call Linear Title & Escrow at (757) 340-0340 today.

Thrilled. Ecstatic. Elated. These are all emotions associated with buying a new home, whether it’s your first time or you’re a seasoned buying pro. Yet with each home buying experience, there is something to be gleaned. Some pearl of wisdom you didn’t know or overlooked before, that can make you a smarter homeowner, future seller or home buyer if and when you purchase another home. What will you take with you from your recent real estate purchase? How can you get the most out of your home buying experience?

• Did you use an agent? Real estate agents have much to offer in the way of knowledge about the housing market and in finding your dream property. Take advantage of having an agent in your corner for future purchases, if you skipped it this time around.
• Assess your initial property search. What worked? Was it as productive as possible? Did you maximize your time by looking in the right location and appropriate price range?
• Did you get pre-approved prior to looking for a new home? Mortgage pre-approval certainly offers some advantages. Read our previous post on the benefits of being pre-approved here.
• How was the road to closing? Did you experience an easy loan application process, or are there ways to improve the management of documentation in future real estate transactions? Keeping meticulous financial records and statements can help streamline this process for the future, in a big way.
• Make note of what worked. If you did your homework, stayed within your budget and got an awesome deal on your home, pat yourself on the back! Take careful note of what factors or actions worked best for you, so you can apply them to future home buying experiences.
• Make note of what didn’t work. On the same token, identifying things that you would do differently the next-go-round also is prudent. Avoiding past mistakes can go along way in making any future home buying experiences easier.

If you’ve just purchased a home, congratulations! You’ve reached a milestone, whether it’s your first home or your third. At Linear Title & Escrow, we focus on making your closing as smooth, efficient and streamlined as possible. Contact us today at 757.340.0340 with your closing questions.