What is Included in Closing Costs?
Closing costs are a necessity and include all of the expenses and fees associated with buying a home. This list below outlines some of the typical costs you may see at closing and when they are due.
What You Need To Know
Buyers need to know how much these fees and expenses will cost. While the amounts can vary widely, you can generally expect to pay between two and five percent of the purchase price. You will receive a loan estimate when applying for a loan but actual costs are based on the state and county of your purchase. Prior to closing, you will receive the Closing Disclosure that provides exact details of the loan. Many of the costs you pay at closing are set by the decisions you made when you were shopping for a mortgage.
Keep in mind that buyers may request assistance from the seller to cover some costs, but the seller is under no obligation to agree to provide this concession. If he does agree to do so, he may counter with a higher selling price. Read carefully before you sign anything. All costs and accountable parties will be spelled out on the forms. Just don’t expect to exchange cash at the closing.
What is the Closing Disclosure?
The first sections of the Closing Disclosure provide information about the buyer, seller and lender. It lists the property address, closing date and selected settlement company. It also details the type of loan being used for the purchase. The buyer’s costs are in the next section. The document provides the amounts due to and from the buyer, with the final amount on the last line. The next section lists the amounts due to and from the seller before moving on to the settlement charges. This includes the amount in escrow, title insurance, lender fees and other settlement charges. The loan estimate is compared to the costs listed on the document, making it easy to see where any differences lie. The final section provides information on the loan you will receive. This includes the loan amount, interest rate, monthly payments and information about whether this is a fixed or adjustable rate loan. Here, you can also find out whether there is a balloon payment or prepayment penalty. Take time to carefully review the statement with your lender before signing and ask questions to ensure you understand fees.