Whether it’s your first Closing or you’re a ‘Seasoned Pro’, virtually no one buys or sells property without help from one or more Real Estate Related Services. Your costs include fees for Brokers, Lenders, Attorneys, Title Companies and others who are involved in the transaction.
Altogether, the total costs of these various services become your actual Closing Costs.
Settlement Statement
When you close a transaction, your Closing Costs will be detailed in a HUD-1 Settlement Statement that includes seven categories.
The Borrower (Buyer) pays everything in the Paid from Borrower’s Funds column. The Seller pays the costs listed in the Paid from Seller’s Funds column. A notation next to each charge indicates who receives the monies.
Before the Closing
Three business days before the Closing you should receive a Good Faith Estimate of the Settlement Charges. Since these charges are just an estimate, the final charges may vary.
One business day before Closing, call and request a copy of the Actual Settlement Statement. Carefully study the statement and call the Title Company (or Attorney who will be handling the Closing) if you have any questions.
Commission Costs
The first category in the Settlement Statement is Sales/Broker’s Commission. This is the commission that is paid to the Real Estate Agents, usually by the Seller, and is often a percentage of the Selling Price.
Loan Charges
The next category of costs, Items Payable in Connection with Loan, is usually paid by the Borrower (Buyer) and includes the Loan Origination fee (if any), as well as fees for the Appraisal, Credit Report, Inspections and Private Mortgage Insurance ‘PMI’ (if required by Lender).
You may often see lower fees for Couriers, Processing, Administration and Flood Certification. These amounts add up, so verify that they match the Estimated Charges and ask questions if anything puzzles you.
Advance Costs
The third category, Items Required by Lender to be Paid in Advance, includes Prepaid Interest on the Loan, a Mortgage Insurance Premium and a Hazard Insurance Premium. These Costs are usually paid by the Buyer.
Escrow Accounts
Reserves Deposited with Lender, the fourth category, represents money placed in an Escrow Account to pay taxes to the City, County and other taxing entities, such as the School District, etc. The Buyer is usually responsible for these fees.
Title Charges
The fees itemized in the fifth category, Title Charges, are often split between the Buyer and the Seller. They may include charges for Title Search, Title Insurance, Document Preparation, Notary Fees, Attorney’s Fees and other fees, such as Escrow Fees, Fees for Tax Certificates and Fees for Messengers or Couriers.
Recording Fees
Government Recording and Transfer Charges, the sixth category, includes costs associated with Recording the Title Change at the Courthouse. The Recording Fees, the costs for Tax Stamps and Deed Releases and other fees are usually paid for by the Buyer or the Seller.
Final Charges
The seventh and final catch-all category, Additional Settlement Charges, is where you’ll find costs for Surveys, Pest Inspections, Various Treatments, Home Warranties and Repairs – almost anything agreed upon by the Buyer and the Seller that will be paid by one or the other at Closing.
Negotiate
Remember that Closing Costs can be negotiable. You are entitled to ask for an explanation of any fee and/or request to have the fee removed or paid by someone else.
Closing Costs may vary by State and Region, according to tradition and practice. Inquire about the specifics in your area by contacting your local Mortgage Professional.
In Florida contact Steve Chaney at Mortgage Professionals, Inc. (954) 801-0765
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