Know Your Closing Costs

by Robin Anderson Real Estate 09/22/2019

When buying a home, nothing could be worse than getting down to the hour of closing only to discover you don't have enough money in your account for all those insane fees you didn't know about. These fees are due to the lender and other third parties such as the title company at the close of the deal and appear on your HUD-1 settlement statement. Here’s a shortlist of the most common fees.

  • Activation fee: see “Points.”
  • Application fee: lenders charge a few to cover the costs of processing your loan information.
  • Appraisal fee: the appraiser that completes the appraisal report receives either a fixed amount or a percentage of the property's estimated value.
  • Attorney fees: if a real estate attorney coordinates the closing of the property and reviews the documentation, title examination, and a plethora of other actions, fees are due to the attorney.
  • Credit report fees: during the mortgage qualification process, lenders request a credit report. The agency that creates the report charges a fee regardless of whether or not the loan actually is disbursed.
  • Documentation fees. Commonly referred to as doc fees, these are the fees real estate brokerages charge for preparing documents for both seller and buyer.• Escrow deposits: during the negotiation period, earnest monies, seller payments toward closing, seller payment of property taxes (because they are paid in arrears), and prepaid private mortgage insurance monies go into a separate account established just for this transaction known as an escrow account. The escrow company releases the funds as required when the transaction completes.
  • Escrow fees: the escrow company charges a fee for setting up the account, holding the monies and then disbursing them upon completion of the transaction. These fees may also include wire transfer fees, legal and document preparation fees, notary services, demand order fees, and fees for any other service provided by the escrow company.
  • Flood title certification: loans on homes in certain flood zones sometimes have different requirements that require specific flood-related title searches for which there may be fees. In addition, homes located in flood zones need a policy for flood insurance, which may generate additional escrow fees.
  • Inspection fees: most often, a home inspection is part of the real estate transaction. The company completing the examination charges either a flat fee or one based on the square-footage and time required to research comparable listings and prepare documentation. Either the buyer or the seller will pay the inspection fee, determined in the negotiation process.
  • Loan original fees: see “Points.”
  • Pest control fees: many lenders require pest inspections and mitigation before completing the loan process. Either the buyer or the seller will pay these fees, determined in the negotiation process.
  • Points: In basic terms, a “point” is one percent of the total amount of a mortgage loan. Several types of points exist, but the two common to most real estate transactions are discount points and origination points. Discount points are prepaid interest a borrower may purchase to reduce interest rates on future payments. Origination fees are a percentage of the loan charged by the mortgage broker for servicing the loan. These are also known as activation or loan origination fees.
  • Recording fee: the municipality that records the sale and transfer of ownership (usually the county clerk) charges a fee.
  • Survey fees: if your title company required a survey to determine the exact boundaries, payment is due.
  • Taxes and insurance: during closing, property taxes and homeowner's insurance fees are prorated to cover the time between closing and when the first mortgage payment comes due and collected in advance. The escrow company continues to hold these funds until payments to the government agency and insurance company come due.
  • Title search and title insurance fees: a title search reviews historical records to make sure there or no liens or prior claims on the property that would preclude you buying it. Also, you pay for title insurance to protect your lender's interests in the event something was missed in the title search.
  • Underwriting fees: lenders charge for processing the loan and providing it to you. This fee appears on the closing statement.

Your professional realtor can give you a good idea of what closing costs are for your purchase so that you're not in for a nasty surprise on closing day.

About the Author
Author

Robin Anderson Real Estate

“My Passion is people and relationships and I promise to provide my clients with exceptional service tailored to their individual needs.” -Robin Anderson 

Robin is a Georgia native who brings her passion for people and her love of homes to work for her clients. She and her husband, Andy, have been married for almost 28 years and have two children, Ellen and Drew. They currently live in Fulton County, but Robin has also lived in Cobb County, Douglas County, Carroll County, and Coweta County. She has been integral to many real estate endeavors including designing and building several custom homes, remodeling homes, subdividing land, managing rental properties, and buying and selling properties. After spending two years in Cumming and Decatur working with a new home builder, Robin is excited to work with buyers and sellers in her own community. Although Robin is driven to provide outstanding service to her clients, she is acutely aware that people want to know you care about them before they care how much you know. She believes meaningful relationships bring immeasurable joy to the world, and she knows that real joy comes from faith in Jesus Christ. She counts her faith, family, friends, and community as her most treasured blessings. In our increasingly digital world, Robin understands the importance of multimodal marketing, so she and her team employ the latest research, marketing strategies, and technologies to ensure that their clients’ properties are positioned and marketed for success. With professionally designed advertising strategically placed in magazines, direct mail publications and flyers, and Internet sites, her clients’ properties receive the highest and most effective exposure in the marketplace. Robin is highly motivated but sensitive to the fact that buying and selling homes can be an emotional experience, so she makes it a priority to keep clients closely informed throughout the process and strives to produce quick results. She appreciates the opportunity to help her clients navigate the real estate process, and she aspires to deliver quality customer service that is both informative and positive.