Who pays closing cost when I purchase a home – buyer or seller?
Both buyer and seller pay their own closing costs fees. Typically, when an offer is accepted you will have buyer and seller pay their own fees. Sometimes when you have a first-time buyer you may have seller assist in closing costs or if you have a distressed seller you may have the buyer assisting with closing costs.
Here is a list of some of the Closing Cost fees you will incur when purchasing a property.
Non-Recurring Closing Costs Associated with the Lender
lender will want to verify that the property’s value is comparable to similar property based on recent sales in your area.
The lender naturally wants to verify your good (or acceptable) credit rating.
Flood certification fee:
The certification verifies whether your property is in a federally designated flood zone.
monitors your property if and when flood zones are remapped.
Lender Inspection fee:
newly constructed property to verify that construction is complete with carpeting and flooring installed.
discount points, each equal to 1 percent of the loan amount, in addition to the loan origination fee.
Loan Origination Fee:
This is also called "points." Typically, the more you pay in points, the lower the interest rate.
Mortgage broker fee:
They may also add in any broker processing fees in this area.
Tax service fee:
This fee goes to an independent service that monitors your payment of property tax for the lender.
Other Lender Fees
Administration fee: cost varies.
Either this or an underwriting fee will typically be charged
Appraisal review fee:
An appraisal review is usually done on higher-valued properties.
Even though lenders now can draw up their own documents without paying document preparation firms, you’ll still pay this.
This is the cost of putting the loan together.
Warehousing fee: cost varies.
This you may end up paying it – it’s the cost of a “warehouse” line of credit.
Wire transfer fee:
This is the cost to transfer funds from one account to another.
Items required to be paid in advance
Homeowner’s insurance: cost varies.
You are usually required to pay the entire first year’s insurance premiums at closing.
Some first-time homebuyer programs still require the first year mortgage insurance premium to be paid in advance.
Pre-paid interest: cost varies.
This is the interest that will accumulate between the day of closing and the day the first payment is due, usually the first of the following month.
Up front mortgage insurance premium:
This is 2.25 percent of the loan balance, normally added to the balance of the loan. If applicable.
VA funding fee:
This is paid to the Veterans Administration for guaranteeing your loan.
Reserves Deposited with Lender
Mortgage insurance impounds: allow mortgage insurance monthly, but you might have to put two months’ worth of premiums into an for a reserve.
Property tax impounds: Depending upon when taxes are due determines how much you will have to deposit towards taxes to start up your impound account.
Miscellaneous Non-recurring closing costs
Courier fee: This is the charge for sending documents back and forth between lender and borrower.
Home inspection: . This is an optional, but recommended, cost.
Home warranty: Home warranty usually covers such items as the major appliances, is paid by the seller.
HOA transfer fee: This is the cost to transfer the membership from the seller to the buyer.
Loan tie-in fee: cost varies This is for services they provide in dealing with the lender.
Notary fees: This is to make the document signatures legal.
Pest inspection: This inspection tests for pests and problems such as wood rot and water damage.
Recording fees: Charged to record documents with county government recorder.
Sub-escrow fee: cost varies. The title insurance company usually charges this for dealing with the closing agent.
Title insurance: cost varies. You pay this to make sure you have clear title to the property.
You can expect to pay 3-5% of your purchase price, you can get a better estimate from escrow when you purchase or once you find out how much you are qualified for you can ask your realtor to get a estimate of costs from escrow company.