Let’s talk about Real Estate closing costs:Find all the fees you’ll pay, by James Joseph.

Let’s talk about Real Estate closing costs: Find ALL the fees you’ll pay

By James Joseph

Fees are incurred over and above real estate costs during a real estate transaction. The prices are customarily paid to third-party accounts like mortgage lenders, and the buyer pays expenses associated with new homeowners. Such charges include property taxes, tax service fees, and others. Sellers also pay closing costs such as tax transfer and attorney fees, among others. The expenses vary with the location of the home to be bought and the mortgage lender. Several examples of closing costs by the buyer in detail are such as;

HOME INSPECTION FEE

Before closing on a new home, it is essential to associate a home inspector who assesses any problems the house might have. If there are any, the buyer can negotiate with the home seller. Such costs range from $280 to $510, depending on the size of the home. The fees are optional, but typically buyers are encouraged not to omit the process. The inspector checks for the home’s condition, and if it is in a bad state, it might lead buyers to withdraw an offer to look for a better home.

PROCESSING FEE

When an individual applies for a mortgage, there usually are fees charged to the borrower to cater for processing, improving of credit scores, and running credit checks. Processing or application fees also cost around a few hundred dollars and depend on the mortgage lender.

ORIGINATION FEE

An origination cost is 1% of the total cost and caters to all mortgage paperwork. Such fees are necessary since they facilitate the buyer to get the loan at the right time. It covers the cost the lender incurs while processing the paper works.

PREPAID INTEREST ON A MORTGAGE

Buyers usually are encouraged to pay these fees towards the end of the month. Prepaid interests are part of the monthly mortgage interest and cover the duration between the closing date and the first scheduled mortgage payment.

APPRAISAL FEE

Lenders involve third parties well conversant with home valuation. Valuing is necessary since they prevent one from buying an overcharged home. To the lender, home valuation determines the amount of money a borrower will receive for a given home. They also check whether the home is ready to move in, among other aspects. The appraisal fee is typically between $300 and $600, but in some instances, the price may be higher.

ATTORNEY FEES

Depending on the state one is, attorney fees are essential. When closing, the attorney prepares and reviews contracts and agreements. The amount paid depends on the buyer and local rates, but real estate attorneys are unimportant in some states.

DISCOUNT POINTS

Sometimes, the lenders allow one to pay money upfront to reduce mortgage interests. Paying upfront involves buying discount points. A single

discount point is typically 1% of the loan amount. Fees for discount points are typically indicated on the loan estimates under origination charges.

HOMEOWNER INSURANCE

The type of insurance caters to any damages on the property. At times it is necessary to have insurance that caters to activities in one’s home. That is, if a person is injured within the individual’s premise. Different lenders require a borrower to have a certain number of insurances in case of any problems with the home.

PROPERTY TAXES

The taxes are paid to the local authorities to cover public services. The amount of tax to be paid depends on the location’s home and its value. People who buy houses from their friends or family members ask the amount paid in the previous years so that they can find the range. Lenders typically require one to first pay property taxes for at least one year before closing. Generally, property taxes cost slightly higher than 1% of the home value every year.

PRIVATE MORTGAGE INSURANCE

Private mortgage insurance is payable by borrowers who give a less than 20% down payment deposit. PMI protects the lender if a buyer defaults from paying a given mortgage. In most instances, private mortgage insurance costs around $30 to $70 for every $100,000 borrowed. On the closing date, a borrower pays for private mortgage insurance for one month.

CLOSING COST FOR SELLERS

TRANSFER TAX FEE

Such fees are payable for home ownership and title transfer to the new homeowner. The amount paid depends on the state, but there are states where title transfer is not charged.

ATTORNEY FEES

In case the home transfer of home ownership is in the presence of an attorney, both the buyer and sellers pay the attorney.

REAL ESTATE AGENT COMMISSION FEE

Sellers who use realtors pay roughly 6% of the total home sale value. The cost is divided between the listing agent and the buyer’s agent. However, there are instances where the seller negotiates to only pay for the listing agent; in other cases, a buyer decides to take the cost to stand out competitive.

Before home buying or selling, it is essential first to research all the processes involved and estimate the total amount required before the purchase since it makes the process easier.