Understanding Closing Costs

There are “closing costs” every time a home sold or bought. These costs include the fees associated with various components involved in a standard real estate transaction.

Typically Buyer Closing Costs:

  • Appraisal fee
  • Origination fee
  • Prepaid interest
  • Prepaid insurance
  • Flood certification fee
  • Tax servicing fee
  • Credit report fee
  • Bank processing fee
  • Recording fee
  • Notary fee
  • Title insurance

Typical Seller Closing Costs: 

As mentioned in a previous post, sellers typically cover the realtor commissions, which generally are 6% (3% for the seller, 3% for the buyer) of the selling price of the property.

Any unpaid property taxes are required to be paid by the seller, too.

Negotiate! 

When it comes to closing costs, buyers tend to have the most wiggle room and allowance for negotiation. Some buyers opt to buy the home at a slightly higher asking price, in return for a credit towards closing costs. For example, if buyer’s are facing $6000 in total closing costs, they could ask to purchase the home for $6000 more–an amount that won’t affect a 15 or 30-year mortgage more than a few dollars each month. The end result is more money in the buyers’ pockets at the time of purchase.

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