Purchasing a home is exciting, but it is important that you are prepared for all the associated expenses to avoid any unpleasant surprises at the closing table. Understanding what closing costs cover and budgeting for them is the best way to avoid these surprises and ensure a pleasant conclusion to your home buying experience.
What are Closing Costs?
Closing costs are the fees and expenses, above and beyond the sales price of the property, required for services to complete a real estate transaction. These fees include title fees, lender fees, and prepaid costs and typically equate to 2-3% of the sales price for home buyers. These costs are paid at day of settlement or the day that you close, along with your down payment.
What Fees are Included in Closing Costs?
The example below is based on a $755,000 purchase price. Please note that this is just an example and that closing costs depend on many variables so there may be additional fees included or excluded in your transaction.
PRORATIONS/ADJUSTMENTS:
County Taxes: Credit to the buyer of $1,813.60
LOAN CHARGES:
Loan Points: $3,534
Processing Fee: $675
Underwriting Fee: $695
Appraisal Fee: $475
Credit Report Fee: $78
Prepaid Interest: $1,569
IMPOUNDS:
Homeowners Insurance(for 3 mo): $367
Property Taxes(for 7 mo): $3,989
GOVERNMENT RECORDING AND TRANSFER CHARGES:
Recording Fees(Deed & Mortgage): $109
Recordation Tax to County: $4,863
TITLE CHARGES
Survey: N/A
Five Great Reasons to Purchase a Survey:
- Undisclosed Rights and Easements
- Undiscovered Encroachments
- House Built on Incorrect Lot (Yes, I’ve actually heard of this)
- Size of the Property
- Adding on in the Future
Settlement Fee: $650
Title Examination: $130
Title Binder Preparation: $75
Title and Judgement Search: $125
Power of Attorney: N/A
Owners Title Policy: $1,718
Reasons why you should have enhanced owners title policy:
- Protection for as long as you or your heirs own the property
- Protection from attorney’s fees and other costs involved in defending your right to the property
- Forgery, defective title, expired power of attorney, property procured under fraud or duress, unknown tax liens, etc.
Lenders Title Policy: $1,974
Homeowner’s Insurance Premium: $1,467
Can I negotiate for the seller to pay my closing costs?
- Yes, you can negotiate for a seller subsidy meaning the seller gives you a credit towards your closing costs. Keep in mind while negotiating that this credit cannot exceed what your total closing costs will be.
Whether you are new to the home buying process or an experienced buyer, I always suggest linking up with your trusted real estate professional up to six months prior to beginning your search. The real estate market is constantly changing and being proactive is a great way to avoid any unnecessary roadblocks during the search.
Check out some of our past articles and look forward to some Coming Soon articles:
- Virtual Showings: Is Matrix the way to go?
- Does staging make a difference?
- Settlements During Coronavirus
- Down Payment Myths
If you have specific questions or would like to set up an in-person meeting to discuss your scenario, please call or email me directly at 703-915-2244 / [email protected]. If you enjoyed this post and would like access to more of my articles/videos, visit the video/blog section of my website at: https://jcurrygroup.com/videos/
Jason Curry
Licensed Realtor: VA & DC
J Curry Group at KW Metro Center
2101 Wilson Blvd #100
Arlington, VA 22201
703-224-6095
