Closing Costs are the various fees you are expected to pay upon completing a real estate transaction. There are several costs, and we cover each one of them in detail to provide a helpful guide for our clients looking to buy or sell real estate in the Mid-Ohio Valley.
Should you have additional questions regarding a particular topic, we discuss in this blog post or have specific inquiries for your real estate deal, please don’t hesitate to Contact Our Team. We’re a local real estate team with extensive experience working in the region and would be glad to represent you in your transaction.
Different Types of Closing Costs
A. Mortgage-Associated Fees
These costs include all fees involved with the application and processing of your mortgage. Homebuyers looking to finance their purchase will want to review these expenses as they add a significant amount to your upfront payment upon closing the deal. These costs include:
- Credit report fee
- Application fee
- Legal fees
- Local fees
- Origination fees
- Underwriting fee
B. Property-Associated Fees
Property-Associated Fees involve all payments that help verify the value of a property. Sellers can use this to justify the price tag of their home, while buyers can use these services to ensure they are paying for the right amount for the home. Examples of these costs include:
- Inspection fee
- Appraisal fee
- Title insurance
- Title search
Mid-Ohio Valley Closing Costs
Home Buyers Closing Costs
An Escrow Company is a 3rd party that collects all the pertinent documents of a real estate transaction and the payment of the buyer. They ensure that both parties are able to deliver on their commitments as per the purchase agreement before releasing funds to the seller and finalizing the transfer of the property to the buyer. The typical commission of an escrow company is 0.5% of the property value.
Mortgage Fees are the payments a buyer makes to his lending company when getting a mortgage. If you’re a first-time buyer, you may want to consult with your realtor on which financing options are available to you may be eligible to avail good deals that you are not aware of. Examples of loans available to buyers include:
- Conventional Loans
- FHA Loans
- VA Loans
If you’re applying for a loan, you’ll also have to pay for Title Insurance. This policy protects the buyer and lending company from any financial losses resulting from issues with the ownership of the property.
Appraisal Fees involve the various costs of ensuring the home is livable and has no underlying damages that require repair or treatment. Typically this includes home inspections, termite inspections, property surveys, flood certification, plumbing, sewage, gas, etc. You’ll want to make sure you do the necessary inspections to ensure you’re paying for the correct value on the property. In some cases, buyers may skip out on home inspections and purchase the property as-is to expedite the deal’s closure, but you want to consult with your realtor if you plan to take the risk.
It is essential to have an attorney review the title evidence on a property and other pertinent documents. Your lawyer will ensure you are appropriately informed on the facts involving your purchase agreement, and you are adequately protected when purchasing a home. Attorney Fees for a real estate transaction range between $75 to $100.
Home Sellers Closing Costs
Sellers typically pay off any outstanding HOA Fees, Utility Bills, and Property Taxes due on the property. If you’re selling a home you’ll want to have paperwork prepared on recent payments to prove that all bills on a listing are up to date and fully paid. If the property is on arrears and you’re planning to use funds from the sale of the property, you’ll want to discuss this with your escrow company and buyer to ensure transparency.
A title search is a service the proves you are the legitimate owner of the property and have the authority to sell it. This also assures the buyer that there are no liens, forgeries, or inheritance claims on the property you are selling. In some cases, the buyer may want to do their own Title Search when making a purchase. A Title Search typically costs between $100 to $150.
The agent commission is typically deducted from the total amount of the property purchase. This applies to both the buyer’s real estate agent and the seller’s agent.
How to Save on Closing Costs
If you have leverage on your deal, you may have the opportunity to negotiate to have the other party pay for some or all of your closing costs. If you’re buying a home with a seller looking to sell fast or are selling a property in high demand, your counterpart may be willing to pay for your closing costs to help move the deal along.
You’ll want to close your transaction at the end of the month to save on your daily interest rate. Your first “per diem” payment covers all the days before the month ends as well as the next month. If you close at the end of the month, you can save a good amount on your first interest payment.
You should inquire with multiple lending companies if you’re planning on taking on a mortgage for your home purchase. Having a good number of offers will increase the chances of getting a better deal. However, you want to watch out as each lending company will request a credit report that can reduce your credit score.
Ask for a GFE (Good Faith Estimate) from the mortgage companies you talk to. Compare each estimate you receive to determine which offer would be best for your purchase. Make sure to inquire if any of the items on your assessment can be removed or discounted when you consult with your lender.
Same as when you shop around for the best mortgage company, you’ll also want to do the same thing for the various services you’ll need to cover when closing your deal. Home inspections, title companies, attorneys, etc., may have promotions or discounts that you can avail of.