Most buyers are usually extremely excited to get to closing, and for good reason: they’re about to be homeowners! However, there is a very important, and less exciting, part of closing that buyers should be aware of – the closing costs. Although sellers typically pay a higher amount at closing than buyers, buyers are accountable for a laundry list of different closing expenses that can quickly become difficult to keep track of for the average person. What are these expenses, and how do you deal with them? Adam Leitman Bailey, P.C., can help, and so can reading the rest of this article.
What are the Closing Costs Paid by the Buyer?
Sellers bear the heftiest closing fee, since they are accountable for paying the real estate commission on the sale. However, after paying the commission, sellers are usually off the hook. Buyers, on the other hand, are accountable for the following laundry list of fees:
- Origination Fee
- Appraisal Fee
- Prepaid Insurance
- Prepaid Interest
- Tax Servicing Fee
- Credit Report Fee
- Flood Certification Fee
- Bank Processing Fee
- Recording Fee
- Title Insurance
- Notary Fee
- Down Payment
- Home Inspection
- Land Survey
There will be some variety between different jurisdictions and transactions, but buyers can generally expect a list of fees at least as long as the one above. Given this, it is extremely important that buyers ensure that they will actually have sufficient funds to pay for closing before even entering into the contract. This can be done by acquiring a good faith estimate of costs, which will tell them roughly what closing will cost them. Buyers should also maintain a cushion of a few thousand dollars to cover items not included in good faith estimate, or for costs that were underestimated.
The buyer shouldn’t accept the good faith estimate at face value, though, and they shouldn’t rely on their own knowledge when reviewing it. Lean on the experience of Adam Leitman Bailey, P.C. when determining whether the estimate is fair and realistic. Sometimes important items, like the cost of title insurance and title search fees, are missing and an experienced real estate lawyer will be able to catch this for you.
Seeking Help with Closing Costs
Despite the buyer’s overall costs at closing being somewhat lower than the seller’s, it can still be difficult for a typical buyer to come up with all that cash at once. It may be possible to convince a seller to pick up some extra closing costs instead of asking for a reduction in the purchase price. After all, a few thousand dollars off the purchase price is only going to reduce your monthly mortgage payments by a few dollars, but saving yourself a few thousand dollars in closing costs will keep money in your account now. The outcome will be more or less the same for the seller, so there’s a good chance that they’ll agree.
Conclusion
Buying a home is expensive, and on top of this, buyer’s are responsible for a litany of additional expenses before closing can be completed. Consequently, it is of vital importance to know exactly how much you’ll owe ahead of time by obtaining an estimate, and having that estimate reviewed by your attorney. In addition, it may be worth negotiating with the seller for them to take on a few of the costs, since they normally only have the commission to deal with.
