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Don't Be Suprised By Closing Costs
Transferring the ownership of a home at closing can be confusing. Even though real estate closings take place daily, the paperwork and costs that ensure that your property transfers legally can often be met with surprises if you're not prepared.
Our real estate agents are here with an explanation of what costs to expect at closing so you are not caught by surprise.
Closing Costs: No Surprises
In any real estate transaction, buyers and sellers should understand each closing cost component before coming to the signing. Some items can be negotiated before the closing to determine who pays.
Typical costs that may appear on your real estate closing statement are:
- Real Estate Commissions: Usually paid by the seller, this is the realtor fee, usually a percentage of the selling price, to sell the property. The total may be divided between the selling agent and a buyer's agent.
- Origination Fee: Often expressed as a percentage of the amount borrowed, a lender or broker will charge a fee to cover expenses of processing a mortgage application, administrative costs, loan underwriting, and funding.
- Points: A point represents 1% of a mortgage. Borrowers often have an option of paying more "points" to receive a lower interest rate. A point may be worth one-quarter percent reduction in the mortgage rate. Conversely, borrowers might ask for "lender credits" to offset some closing costs while raising the mortgage rate.
- Underwriting Costs: These represent the cost of researching your credit history and other background information to determine if you qualify for the loan.
- Credit Report: This information is required to determine whether the mortgage application is approvable and the maximum amount the borrower may borrow.
- Appraisal: Lenders require a professional assessment of the property that will ensure they will recover the remaining balance of the mortgage in case of default and foreclosure.
- Survey Costs: Often paid by the buyer, the mortgage lender may require a survey to confirm property lines.
- Home, Flood, and Pest Inspection: Before closing, a professional inspection for damage and deterioration is standard procedure. Buyers may request that the seller repair deficiencies before the closing. In some cases, the seller may have listed the home "as is." Alternatively, the seller may counteroffer with a reduction in the selling price.
- Title Search: Cost to research the property title among public records.
- Title Insurance, Lenders: Title insurance protects the lender in case there are undisclosed liens or other encumbrances. Buyers may also purchase title insurance covering the property as long as the buyer or heirs have possession.
- Settlement Fee: Paid by either buyer or seller, this fee is paid to the closing agent to manage the closing and escrow accounts.
- Property Taxes: Responsibility of the seller until closing. After that, the buyer pays.
- Mortgage Insurance Premium: To protect the lender, if required, the buyer may pay the first premiums at closing.
- Recording Fees: In many areas, these are fees to record the new deed and mortgage with the local government.
Value of an Experienced REALTOR®
When you're ready to begin touring Sarasota homes for sale, there is nothing like the help of a local real estate professional by your side. Our real estate agents know the current market in Southwest Florida and are ready to help.
Contact us at Wagner Realty to get started.