Costs At Closing
What Are The Costs Associated With Closing On A Home?
The purchase of a home is the biggest investment many people will make during their lifetime. It is important to know what costs will be the responsibility of the buyer at the time of the purchase and how much money will be needed to close the deal. Most lenders or realtors can prepare a cost sheet for buyers showing those items requiring cash at the closing. The items listed on the cost sheet for home buyers may include the following:
Inspection Fee
Professional home inspectors have a checklist of items to review. These items include, with examples in parentheses, structural elements (walls, ceilings, roofs); exterior evaluation (wall coverings, drainage, doors, windows); roof and attic (framing, ventilation, gutters); plumbing; systems and components (water heaters, furnaces, chimneys) electrical (circuit breakers, wiring, light fixtures); appliances (dishwasher, oven, smoke detectors); and garage (slab, firewall, openers). Any defective areas will be noted and the seller may need to repair them. The cost of an inspection will run near $100 per hour as a general rule of thumb.
Appraisal Fee
This buyer cost is for getting a home value estimate from a professional home appraiser who will visit the home and inspect its size, condition, quality and function. In determining a final value, the appraiser will compare the home to similar homes previously sold in the area according to square footage, appearance, amenities and overall condition. The fee for this work generally runs from $300 to $500.
Transfer Fees
This cost pays for the recording of the deed which shows the property title going from one party to another. The cost varies from state to state.
Down Payment Cost
The down payment amount does vary depending on what the buyer can afford. There is a current discussion on down payment amounts between government agencies and mortgage lenders. Proposals ranging from 10 to 20 percent of the home’s value are being considered.
Closing Costs
The home closing costs include a gamut of items that are necessary for the closing. There are basically two categories, non-recurring costs and recurring costs. The non-recurring costs are one time costs and can include the fees for title policies, escrow, notary, wire fees, attorney, recording, state-county-city transfer taxes and lender fees. The recurring costs can include property taxes, fire insurance premium, mutual or private mortgage insurance premiums and prepaid interest. The closing costs can range from 2 to 4 percent of the purchase price.
Prepaid Items
A final category consists of prorated costs which can include homeowners insurance and homeowner’s association dues.
Adding all these costs together will give the perspective buyer a good estimate of what will be needed at the closing. In some instances a few of these costs may be negotiated for payment by the seller.
