If you are buying a residential or commercial property then you are most likely aware that the cost of the property itself aren’t the only costs involved in your transaction!
Title insurance, one critical piece of the transaction that is often overlooked by buyers, represents one part of the expense in closing on a property.
But there are others as well that are described in an excellent overview provided in this article from Closing.com. To read about other topics offered at Closing.com click on the link below.
“Closing Costs Checklist”
The cost of buying a property goes beyond simply paying the price negotiated between the buyer and seller.
You’ll actually pay less, if you can pay cash. If you are taking a mortgage, the closing costs involved to complete the transaction can range from 2% to 7% of the purchase price.
Fees required vary by state. Here are some of the common fees included in a typical settlement, which will comprise your closing costs:
FEES RELATED TO A MORTGAGE LOAN (IF YOU ARE BORROWING TO BUY):
- Loan discount (“points”) – a one-time fee charged by the lender to lower your monthly interest rate
- Appraisal fee* (the lender usually orders an appraisal to determine the value of the property)
- Credit Report fee* (for the lender to research your credit rating)
- Lender’s inspection fee* (for walking through the property)
- Mortgage insurance application fee* (for additional insurance to protect the lender if you default)
- Assumption fee* (fee to process new documents if a buyer is taking over a seller’s mortgage)
- Underwriting fee (the underwriter or insurer reviews your loan package and gives final approval to close to the lender)
* This fee is usually paid before you meet with the settlement or escrow agent to close the transaction.
FEES A LENDER REQUIRES YOU TO PAY IN ADVANCE:
- Interest on your mortgage loan from the day of closing to the end of the month.
- Hazard insurance premium (protection from such hazards, as fire, wind or vandalism)
AMOUNTS THAT MAY BE DEPOSITED ON RESERVE WITH THE LENDER:
- Hazard insurance premium for the year (also called “Homeowner’s Insurance“)
- Mortgage insurance – the number of months varies
- City property taxes – usually two months in advance
- County property taxes – this amount can vary depending on when you close. (The impound accountmust be synchronized with the due date of property taxes. For example, if you close your loan one or two months after property taxes are due, you will generally only need to reserve one or two months worth of taxes. However, if you close near the end of the property tax cycle, you could be required to bring six to nine months worth of tax payments to the closing.)
- Annual assessments (cover any updated value placed on the property for tax purposes)
FEES RELATED TO THE PROPERTY’S TITLE:
- Closing fee for the settlement agent or attorney (depending on who handles the closing)
- Document preparation (be sure to ask for details if you are charged for this; also ask about any “courier” fee if imposed)
- Notary fees (for witnessing signatures on legal documents)
- Attorney fees (if a lawyer is involved in the title process)
- Title Insurance – lender’s coverage (protects the bank), owner’s coverage (guarantees that the buyer has the right to the property)
TRANSFER AND GOVERNMENT RECORDING FEES:
- Fee to record (place on public file) the deed, mortgage and any releases
- County and possible city transfer taxes due on the recordation of the deed
ADDITIONAL SETTLEMENT FEES
- Pest inspection fee
- Other miscellaneous fees may include home inspections, land surveys, flood certification, earthquake insurance, radon tests, or lead-paint inspections depending on the location and history of the property.
At Hallmark Abstract Service our value proposition is to deliver on what it is that our clients expect from us each and every time that they trust us with one of their valuable transactions.
Service, attention to detail, fast turnaround times, willingness to go the extra mile and reasonable pricing on non-policy related fees are just some of the things we are focused on and that our clients have come to expect from us!
And that’s why we continue to earn their business, time and time again!
Call or email us today to set-up an appointment where we will come to your office, learn about the nuances of your practice and explain to you the way that we approach ours!
Mike Haltman, Owner