How Are Closing Costs Determined?

Closing on a home is exciting even for the most seasoned of buyers. But if you are planning to purchase your first home or even refinance your current mortgage, you may be wondering what to anticipate in terms of closing costs.

Buyer vs. Seller

Both the seller and the buyer can expect to pay settlement costs. On average, the cost to close on a piece of real estate ranges from 3 – 6% of the sale price. To provide a better understanding of what makes up the cost to settle on a home, we have listed the associated fees from both the buyer’s and seller’s perspectives.

 Buyer Closing Costs:             

• Home inspection and appraisal                                   

• Loan origination fee                                                   

• Pre-paid interest (discount points)                               

• Private Mortgage Insurance (PMI)                            

• Transfer taxes                                                           

• Recording fees                                                           

• Underwriting fees                                                       

• Courier fee                                                                 

• Title insurance                                                           

• Title search and closing fees                                        

• Homeowner’s insurance    

Seller Closing Costs:

• Loan pay-off amount

• Real estate commission

• Prorated HOA fees

• Property taxes

• Deed preparation

• Grantor’s tax

• Settlement fee

• Notary Fee

• Termite inspection

• Home warranty

• Home repairs 

In some cases, buyers and sellers may negotiate terms to include seller concessions, where the seller contributes a certain dollar amount towards closing fees on the buyer’s behalf. The contributable allowance of seller concessions, however, will vary based on the type of mortgage for which the buyer is applying.

Have other questions about the closing process? Talk to our knowledgeable team at Linear Title & Escrow today!


Key Benefits of Owner’s Title Insurance

Buying a house is an exciting endeavor. It’s also a significant financial investment. Homeowner’s insurance is an excellent way to protect the structure of your home and cover any damage that may result from fire, certain natural disasters, and other occurrences. But what about intangible threats to your real estate investment, such as improper transfer of ownership due to title defects that surface after you’ve closed on your new home?

Lender’s vs. Owner’s Title Insurance

Owner’s Title Insurance is a type of indemnity policy that covers your financial interests should title problems be discovered after settlement. While most lenders require that homebuyers purchase Lender’s Title Insurance policy to cover their interests if you default on your loan, an Owner’s policy is completely optional. It is, however, highly recommended. Here’s why.

3 Advantages of Owner’s Title Insurance

Even when a very thorough title search is performed on a property prior to your closing, there are still instances in which undetected title issues arise months, years, and sometimes even decades after the home is purchased. A wide range of title defects exist, but common examples of such a situation include undisclosed heirs with an ownership stake who learn of the property or unpaid back taxes on the property. Having an Owner’s policy in place can protect the investment you have made in the home and may save you from a devastating financial loss.

Three key benefits of an Owner’s Title Insurance policy include:

  1. Legal Fees: Should you need to go to court to defend your rights to the property, an Owner’s policy will cover your court costs and other legal fees.
  2. Financial Loses: In the event that you lose your home due to defects that occurred prior to you taking ownership, an Owner’s policy will reimburse your loss up to your policy amount for covered title defects.
  3. Peace of Mind: Knowing you have an insurance policy in place to protect your financial stake in your home can offer peace in mind in the event another party has a successful ownership claim against your property.

Protect Your Asset With Owner’s Title Insurance

Once you purchase an Owner’s policy, its coverage stays in effect for as long as you own the property – even if you refinance your loan. Keep in mind, an Owner’s policy does not cover title problems that occur after you close on the property – only those that affect the property’s ownership before it came into your possession.

Even with a clear title, the chance for defects to threaten your rights to your property after closing does still exist. An Owner’s Title Insurance policy can help protect your investment and the place you call home. For more information on Owner’s and Lender’s policies, visit our Title Insurance page or contact us today.