Owning a home is a significant investment, so most people take their time to find the perfect one. It feels great when your offer is finally accepted. As exciting as this may be, it is not the last step. There is still one final hurdle you need to be aware of, the closing costs. Here are ten closing costs beyond your downpayment or loan origination fees that fall squarely on the homebuyer's shoulders.

Appraisal Fees

A home appraisal is an independent assessment of the value of the property. This process must happen for all home purchases involving a mortgage or refinancing. It is essential since the property serves as collateral for the mortgage. The process is carried out by a qualified appraiser. The property value is determined by the sales of similar property, amenities, and square footage. The buyer shoulders the appraisal fees.

Survey Fees

A survey is conducted to avoid having to do unexpected repairs after buying the property. It also confirms the dimensions of the land. The survey company also does title searches to ensure nobody else has a claim to the parcel of land on sale. Other important information revealed by a property survey is shared resources, such as fence, yards, and driveways. You can compare quotes from different companies before settling on one.

 Recording Fees

The local government must record all real estate transactions. Doing so legitimizes the transaction and makes it a matter of public record. The recording is usually done by clerks or a recording agency in the county. The cost of recording fees depends on the county, the complexity of the sale, and the property's size. The buyer and seller may agree to split the cost.

Brokerage Commission

In most real estate transactions, both the buyer and the seller are usually represented by an agent. As a buyer, your agent should help you search for the right house, get the mortgage pre-approved, negotiate the offer, help with inspection, and tie any loose ends during closing. In exchange, you pay a brokerage fee. In the U.S, real estate agents are entitled to 6% of the value of the sale.

It is typically standard (in most markets) for the home seller to pay for the commissions of both the buyer's agent and the seller's agent.

Homeowners Insurance at Closing

Property insurance protects you from home damage. It also covers any injuries that may be suffered by other parties while on the property. If the property is located in a flood zone, you may also have to pay flood insurance. The buyer usually pays the first homeowner's insurance premium at closing. Homeowners insurance payments are often put into escrow so that you pay your premium each month under the same account that you would use for your mortgage payment.

Home Warranty

A home warranty covers the cost of maintaining household appliances for a fixed period. It is very different from home insurance. It is vital to have a home warranty, especially when buying an older home. This is because the useful service of older appliances may not be apparent at the time of buying. Ensure the home warranty covers all the major appliances such as refrigerators, stoves, water heaters, and pumps. It should also cover crucial systems like plumbing, HVAC, and electrical.

Title Insurance

Despite due diligence, a dispute may still arise over ownership of a property. Title insurance covers the lender, and the buyer should such issues arise. Getting title insurance is a compulsory process in applying for a mortgage. The title insurance company will be responsible for paying all legal damages that arise from a defective title.

Property Taxes

The legal owner of the deed pays property taxes. This responsibility is transferred to the buyer immediately ownership changes. The new owner(buyer) is expected to pay property taxes from the date of closing. Since property tax is paid yearly, the seller will most likely have paid the amount due for the year. The buyer will have to refund the prorated share.

Escrow Deposits

Escrow deposits are frequent in real estate transactions. The buyer's deposits are made to show the seller they are entering the deal in good faith. This amount is meant to compensate the seller in case the buyer fails to close. Escrow deposits can range between 1%-2% of the sale price of a property. This money is usually held by a third-party, such as a real estate agent or a title company.

Attorney Fees

Although you can get by without a real estate attorney, it is a worthwhile investment. Should you choose to have one, they will represent you throughout the entire process. An attorney can help with filing documents with the county and state. Other roles of an attorney include property searches and overseeing property transfer.

Bottom Line

Hopefully, this article prepares you for closing. All the closing costs will be contained in a Closing Disclosure. It shouldn't discourage you from closing on a dream home. While some of these costs are fixed, others can be negotiated. The amount of closing costs varies depending on your location. Some sellers may be willing to share some of the closing costs to help speed things along. 

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