Common Closing Costs for Buyers

Common Closing Costs for Buyers

Understanding the Common Closing Costs for Buyers

When approaching the closing process, it’s crucial to be aware of the various costs involved. Here’s a breakdown of common closing costs that you should anticipate:
 
  • Downpayment: The initial payment made towards the home’s purchase.
  • Loan Origination Fees: Charges from the lender for processing the loan.
  • Points: Fees paid to lower the interest rate on your mortgage.
  • Appraisal Fee: Cost associated with assessing the property’s value.
  • Credit Report: Fee for obtaining your credit history.
  • Private Mortgage Insurance Premium: Insurance for the lender in case of a low downpayment.
  • Insurance Escrow: Allocation for homeowners' insurance if part of the mortgage.
  • Property Tax Escrow: Funds set aside for property taxes, often paid with the mortgage.
  • Deed Recording Fees: Charges for recording the property transaction.
  • Title Insurance Policy Premiums: Insurance safeguarding against potential title issues.
  • Survey: Cost associated with property surveys for legal clarity.
  • Inspection Fees: Charges for various inspections such as building, termites, etc.
  • Notary Fees: Charges for notarizing relevant documents.
  • Prorations: Adjustment for shared costs like utility bills and property taxes based on the closing date.
Note on Prorations: Given that many costs are paid periodically, prorations ensure fair distribution. For instance, if you purchase a home mid-month, utility bills and taxes are prorated, reflecting your ownership period and reimbursing the seller for any prepaid amounts.
 
Remember, these costs contribute to a comprehensive estimate provided by the lender before closing. It’s advisable to be well-prepared with a cashier’s check to cover these expenses as communicated by the title company or the entity conducting the closing.

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