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Common
Closing Costs for Buyers
The
lender must disclose a good faith estimate of all settlement
costs. A check to cover your closing costs will probably have to
be a cashier’s check. The title company or other entity
conducting the closing will tell you the required amount for:
�� Down payment
�� Loan origination
fees
�� Points, or loan
discount fees, you pay to receive a lower interest rate
�� Appraisal fee
�� Credit report
�� Private mortgage
insurance premium
�� Insurance escrow
for homeowners insurance, if being paid as part of the
mortgage
�� Property tax
escrow, if being paid as part of the mortgage. Lenders keep
funds for taxes and insurance in escrow accounts as they are
paid with the mortgage, then pay the insurance or taxes for
you.
�� Deed recording fees
�� Title insurance
policy premiums
�� Survey
�� Inspection
fees—building inspection, termites, etc.
�� Notary fees
�� Prorations for your
share of costs, such as utility bills and property taxes
A Note About Prorations: Because such costs are
usually paid on either a monthly or yearly basis, you might have
to pay a bill for services used by the sellers before they
moved. Proration is a way for the sellers to pay you back or for
you to pay them for bills they may have paid in advance. For
example, the gas company usually sends a bill each month for the
gas used during the previous month. But assume you buy the home
on the 6th of the month. You would owe
the gas company for only the days from the 6th to the end for the month.
The seller would owe for the first five days. The bill would be
prorated for the number of days in the month, and then each
person would be responsible for the days of his or her
ownership.
Reprinted from REALTOR® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS® Copyright 2005. All rights reserved. www.REALTOR.org/realtormag
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