Common Closing Costs for Buyers
You’ll likely be responsible for a variety of fees and expenses that you and the seller will have
to pay at the time of closing. Your lender must provide a good-faith estimate of all settlement costs. The title company or
other entity conducting the closing will tell you the required amount for:
·
Down payment
·
Loan origination
·
Points, or loan discount fees, which you pay to receive
a lower interest rate
·
Home inspection
·
Appraisal
·
Credit report
·
Private mortgage insurance premium
·
Insurance escrow for homeowner’s insurance, if
being paid as part of the mortgage
·
Property tax escrow, if being paid as part of the mortgage.
Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or
taxes for you.
·
Deed recording
·
Title insurance policy premiums
·
Land survey
·
Notary fees
·
Prorations for your share of costs, such as utility
bills and property taxes
A Note About Prorations: Because such
costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers
before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid
in advance. For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume
you buy the home on the 6th of the month. You would owe the gas company for only the days from the 6th
to the end for the month. The seller would owe for the first five days. The bill would be prorated for the number of days
in the month, and then each person would be responsible for the days of his or her ownership.
