Buying a home can be a complicated project, and one that carries multiple costs, both obvious and hidden.  It’s important to know what to expect when deciding on purchasing real estate.  Some expected costs include down payments, interest rates on mortgage loans, and even monthly living expenses.  But shoppers may forget those closing costs that come with owning a new house.

These closing costs within the home sale may be owed by the buyer, the seller, or both factions.  Not every sale comes with the same closing costs, so here are a few examples to be aware of:

Brokerage commissions
Paid by: Seller
Commissions are typically paid to the real estate agent for his or her services, such as: marketing a home, locating a buyer, and helping to negotiate the sale.

Title exam and insurance
Paid by: Either party
These ensure that the title is valid and that there are no competing claims against the property and enables a home to be legally transferred to the buyer.

Attorney, escrow, and closing fees
Paid by: Either or Both parties
These fees are usually for document preparation.

Mortgage application fee
Paid by: Buyer
This is often paid to the lender upfront but can sometimes be included as a closing cost.

Credit report
Paid by:  Buyer
Charged by the lender, this report runs a credit check to determine loan eligibility and what interest rate the buyer may qualify for.  This fee can be part of the closing costs or act as a separate transaction.

Other lender fees
Paid by: Buyer
Paid directly to the lender, these fees can consist of underwriting and processing services and are incurred to research and approve the loan.

Recording fees
Paid by: Either party
Used to pay for the creation of an official record of the property exchange, these fees are paid to the municipality in charge of land records.

Inspection and appraisal
Paid by: Buyer
These fees pay for a typically mandatory licensed appraisal and professional home inspection to verify the value of the property and determine if the property is in acceptable condition.

Wire transfer of courier fees
Paid by: Either party
These fees pertain to document transportation.

Document or transaction taxes or stamps
Paid by: Either party
Legally required, this excise tax on the transaction is paid depending upon location.

Discount points
Paid by: Buyer
These are a type of prepaid interest on loans and are equivalent to the percentage of the loan principal.  Points are given in exchange for an overall lower interest rate on the loan and may lower monthly payments for the life of the loan.

 While most closing costs are covered here, some may vary by location and the specifications of the sale and other fees may be included.  To be aware of and understand all the closing costs within your deal, it is always helpful to talk to your local real estate agent!

Article Citation:  Bonarrigo, Jason.  (October 9, 2013).  How much do you know about closing costs?  My Realty Times.  Retrieved October 7, 2013 from: http://jasonbonarrigo.realtytimes.com/advicefromagents1/item/26348-how-much-do-you-know-about-closing-costs.
Picture Citation:  http://prostaffmortgage.com/2012/06/25/closing-costs-arizona-mortgage/