When closing the real estate transactions, many home buyers esp. those who are new to home-buying are not aware of their liability to additional costs. Buyers need to keep some extra funds along-side the cost of the home. The extra cost depends upon various factors like lawyers, lenders, several third party fees and your negotiation skill etc. Home buyers can be able to negotiate couple thousand dollars if they pay close attention to the lender’s estimate. Below you can get a good idea about the average closing costs on a house that will help reducing the estimated closing costs.
Several fees include:
§ Attorney fees
§ Loan origination fees
§ Loan discount points
§ Recording fees and Property taxes
§ Premium for mortgage insurance
§ Title insurance
§ And other small fees
It makes it easier to deal if you know which fees are negotiable and which are not. The costs such as taxes, prorate interests, recording fees, county and city stamps and fees similar to these fees should be paid. Fees such as lender charges, third party fees and loan-processing fees, appraisal etc can be negotiated. Going through the below factors, you can get better ideas to analyze and lower the home closing costs.
Attorney fees: A lawyer should carry out the purchase of your home. This real estate attorney fees varies from lawyer to lawyer, but approximately $500 to $800 is justified fees excluding disbursement. In some cases, it can be negotiated by asking for an hourly charge. Paying for several fees together (such as reviewing the deeds and preparing other deeds along-with other legal formalities) can lower the legal fees.
Lender fees:These fees are not charged by all lenders but these exist with the services of mortgage brokers and small banks. The fees are associated with the closing costs such as application fees, documents preparation, determination of interests charged etc. Some of the elements can be eliminated to save few extra bucks.
Recording fees and Property taxes: The taxes which are paid towards the county or state where the property is situated. Basically the transfer tax and recording fees totals up to 1.5% (1% province and 0.5% state) to 2.5% of the property value. Property taxes are usually split between the buyer and the seller.
Title insurance: There are 2 types of title insurance policies, Loan and Owner’s policies. The loan policy cost depends upon the loan amount and owner’s policy depends upon the purchase price of the home. It depends upon the state that who has to pay the cost of title insurance at closing. The settlement agent of that area can help you handling the process. You can ask for the discounts for reissue rate and reissue credit in case the property has been insured recently by a title insurer.
When the loan is taken, a detailed Good Faith Estimate (GFE) will be prepared by the lender. Basically real estate agents will prepare a Buyer’s Estimated Closing Costs while your attorney prepares your Contract of sale so you will be prepared for settlement costs. Take your time to look in these factors and save unnecessary expenditures that you are not supposed to invest.
Estimate Your Closing Costs on a House.