Closing Costs - Who Pays For What?

Typical Buyer Closing Costs

Outlined below are some of the “typical” expenses a homebuyer should anticipate when buying your first Cleveland area home. Depending on the condition of the market, some of these expenses may be considered “negotiable”.

 

1. Down Payment: The down payment is dependent on the type of mortgage/loan you secure. Conventional loans generally require a minimum down payment in the range of 20% down. FHA and VA (Military/Veterans) loans require a smaller down payment. For more information on types of mortgages, click here.

 

2. Loan Origination Fee: This is often referred to as the Commitment Fee. It is generally computed at 1% of the loan amount, or an amount charged by the lender.

 

3. Discount Points: Discount points are typically used to “Buydown” the interest rate upfront so the borrower can obtain a lower mortgage interest rate. Each discount point is equal to 1% of the loan amount.

 

3. Appraisal Fee: A fee charged by an independent appraisal service that determines the fair market value of the home you are buying. Appraisers use the same analytical data to determine the value of your home as a Realtor who performs a CMA (Comparative Market Analysis).

 

4. Credit Report: Fee to gather your credit report from the 3 Primary Credit Agencies: Equifax, Experian, and TransUnion. Creditors submit your payment history and personal information to these agencies. Each agency operates independently of the other two, so records may differ.

 

5. Flood Letter: Lender must determine if the home is located in a “flood plain” and requires flood insurance.

 

6. Private Mortgage Insurance Premium (PMI): Insurance required by the lender when the down payment is less than 20%. In the event of loan default, this insurance reduces the lender’s loss.

 

7. Homeowners Insurance Premium: A one-year premium of homeowner’s insurance is due in advance at the time of closing.

 

8. Mortgage Insurance Escrow: Lender collects 2 months of homeowners insurance for the mortgage escrow.

 

9. Prorated Property Taxes: Escrow pre-payables are collected for taxes paid from the date of the closing through the end of the month.

 

10. Property Tax Escrow: Two months of prorated property tax to be applied to your escrow account.

 

11. Closing Fees: Any fees associated with closing the sale of the contracted property.

 

12. Recording Fee for the Deed of Trust: Fees associated with recording the deed of trust.

 

13. Mortgage Title Policy: A lender's title policy will protect the lender and their protect their interest in your property. Mortgage lenders require buyers to purchase a lender's title policy. But such a policy does not protect the interest of you, the homeowner.

 

14. Owners Title Policy: Owner's title insurance will not only protect you against hidden risks that would not be disclosed by even the most meticulous search of public records by the lender's attorney, but also will pay for the legal fees required to defend your title as insured against these hidden risks.

 

15. Mortgage Interest Adjustment: Prepaid amount determined by the interest to be paid from the time of closing to the end of the month.

 

16. Survey: Fee collected for property survey.

 

17. Home Inspection Fee: Fee collected for the home inspection

 

18. Termite Inspection Fee: Fee associated with the performance of an inspection to determine if the property is free of any wood devouring inspects.

 

19. Tax Servicing Fee: Fee for applicable real local/state real estate taxes.

 

20. Lender Inspection Fee: Fee associated with the lender’s inspection of the property (if required).

 

21. Notary Fees: Fees to notarize documents filed with the county.

 

22. Fed Ex fees to ship documents

 

23. Other miscellaneous fees

 

Many of the fees outlined above are often negotiable items. Together, we will review these closing cost from your “Good Faith Estimate” prior to closing. If you are thinking about making an offer on your first Cleveland home, I will guide you through every step of this complex transaction to insure your satisfaction.

 

Are you ready to enter the market as a first-time Cleveland area homebuyer? If so, contact me today and we will schedule a no-obligation analysis.

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