The
bundle
of fees
associated with the buying or selling of a home are called closing
costs. Certain fees are automatically assigned to either the buyer or
the seller; other costs are either negotiable or dictated by local
custom.
Typical Buyer
closing costs
When a buyer applies for a loan,
lenders are required to provide them
with a good-faith estimate of their closing costs. The fees vary
according to several factors, including the type of loan they applied
for and the terms of the purchase agreement. Likewise, some of the
closing costs, especially those associated with the loan application,
are actually paid in advance. Some typical buyer closing costs include:
- Record
Deed
$ 10
- Record Mortgage
$ 10 per page, $ 8.50
addional pages
- Doc Stamps on the Mortgage $
3.50 per $ 1,000
- Intangible
Tax
$ 2 per $1,000
- Survey
$ 250 and up
- FF9
$ 10% all charges
Typical
Seller
closing costs
If the
seller has not yet paid
for the house in full, the seller's most
important closing cost is satisfying the remaining balance of their
loan. Before the date of closing, the escrow officer will contact the
seller's lender to verify the amount needed to close out the loan.
Then, along with any other fees, the original loan will be paid for at
the closing before the seller receives any proceeds from the sale.
Other seller closing costs can include:
- Broker's
commission
varies
- Doc Stamps on the
Deed $ 7
per $1,000
- Satisfaction of
Mortgage
$ 10
- Search
Fee
$ 95
- Buyer/Seller Closing
Fees $175 / 50
- Buyer/Seller Title Exam
fee $ 75
Negotiating
Closing Costs
In
addition to the sales
price, buyers and sellers frequently include
closing costs in their negotiations. This can be for both major and
minor fees. For example, if a buyer is particularly nervous about the
condition of the plumbing, the seller may agree to pay for the house
inspection.
Likewise,
a buyer may want to save on up-front expenditures, and so agree to pay
the seller's full asking price in return for the seller paying all the
allowable closing costs. There's no right or wrong way to negotiate
closing costs; just be sure all the terms are written down on the
purchase agreement.
Prorations
At the closing, certain costs are often prorated (or distributed)
between buyer and seller. The most common prorations are for property
taxes. This is because property taxes are typically paid at the end of
the year for which they were assessed.
Thus,
if a house is sold in June, the sellers will have lived in the house
for half the year, but the bill for the taxes won't come due until the
following year! To make this situation more equitable, the taxes are
prorated. In this example, the sellers will credit the buyers for half
the taxes at closing.
