All About Closing Costs

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    Photo: Steven Depolo

    **Updated 1/17/17**

    There are various costs associated with buying a home beyond just the sale price. Too often, many unprepared or first-time home buyers are surprised by closing costs, which are most often paid by the new home buyer. Since these costs are a few thousand dollars, it’s important for buyers to be prepared. Here is an overview of closing costs.

    What are closing costs?

    Closing costs are the fees charged with closing a real estate transaction. This can be when buying a house, but also during a refinance. They are part of every transaction and are essentially the fees to pay every person associated with the process: brokers, surveyors, attorneys, couriers, etc.

    What is included in closing costs?

    These fees are related to the loan, the property,  and the attorney handling the closing. Here’s how they breakdown:

    • Loan – Your loan will have both an application fee and an origination fee. These fees are associated with the process of establishing your loan. These fees vary based on a number of factors. While it is possible to negotiate with the lender on these, it may cost you more in the long run because the lender may agree to waive the fees in exchange for higher interest rate on the loan. There are fees if you use points (you pay to receive a lower interest on the loan) and if you work with a mortgage broker (commission of usually 1-2% of home’s purchase price). If you have less than 20% for a downpayment then you will most likely also pay Property Mortgage Insurance. 
    • Property – There are fees for both the home inspection and the home appraisal. There are often pest inspection fees and possible survey inspection fees if the property lines are unclear. There will be a title fee involved for researching the title of the property to be sure it is free of outstanding claims and you may have to pay a title insurance fee to protect the lender. You will also have to pay property taxes and home owners insurance.
    • Attorney – Closings often take place in attorney offices or with an attorney present and the fees associated will vary greatly depending on how long they work on your closing.

    How much are closing costs?

    One of the trickier parts of real estate is the wide range of these costs. Closing costs vary from state to state and depend on the purchase price of a home. Most homeowners can expect to pay closing costs between 2-6% of the home’s final purchase price.

    Can they be negotiated or reduced?

    Typically closing costs are covered by the homebuyer. Often, to avoid paying our of pocket for this additional expense, the buyer will roll the closing costs into the mortgage amount. This may mean paying a little more, but means less money out of pocket up front. The main way to reduce these costs is to negotiate with the seller about paying them. In some cases, the seller is willing to cover a portion of these costs as part of the sale of the home.

    Would you like to see what homes are currently for sale in Nashville? Call DeSelms Real Estate today at 615.550.5565 and let one of our amazing agents help you find your perfect home!

     

     

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    Our agents write often to give you the latest insights on owning a home or property in the local area.

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