Closing costs are the cost due at the “close” of the deal and are included in your Settlement Statement. Some of these fees go to the lender and some to third-party participants. They include all the fees and costs associated with completing the sale or purchase of your home. They are in addition to the actual cost of the property itself. It’s important to note that these costs apply to both the Buyer and the Seller. Therefore, it is good to familiarize yourself with the closing costs and when selling or buying a home in the North Metro Denver Area. Some fees apply to the actual home, some are for the preparation of documents and some relate to the loan. Here’s a breakdown of all the fees you might expect to find in your closing costs and information about calculating closing costs.
What Fees Are Included In Calculating Closing Costs
Although costs can vary by state or locality, in general, they can include the following. Firstly there are the brokerage commissions. These commissions are paid by the Seller. The commission rate is split between the brokerage who listed the home and the brokerage who brought the buyer. The brokerage gets paid, then the listing or buying agent receives their split. Next, you have the title and title insurance fees. These are the fees the title company charges for the owner’s title policy and the lender’s title policy.
The title company may also charge fees for preparing documents for both the buyer and seller. And then the recording fee is the fee that is charged to record the transfer of ownership into the county record. There will also be attorney fees to be paid at closing. These usually include the fees for an attorney to prepare the deed. Additionally, these fees may also be for an attorney working for the title company to prepare or review the closing documents required to complete the real estate transaction. These fees may also be listed as “title company closing fees”.
Fees From The Home
Then there are the fees related to the house. As a buyer, you will need to get a survey completed on the home, and also an appraisal. These are both fees the buyers should expect to come up when closing on your home. Inspection fees are costs to be paid by the buyer. The pest control fee is also due at closing by the buyers unless the buyer paid for this separately. Prorated utility fees will also be brought up at the closing. If a seller has prepaid utilities for the month, the remainder of the month will be prorated and the buyer will see debit and the seller a credit for the remaining days of the month.
Fees Related To The Loan Calculating Closing Costs
Finally, there are fees related to the loan and are for the buyer. The loan application fee is charged by the lender to cover the cost to process loan information. Next, you need to understand the concept of ‘points’. A point is one percent of the total amount of a mortgage loan. Typically, this will be origination points which are fees as a percentage of the loan. Some lenders offer no-closing-cost loans. However, these fees and points may be bundled into higher interest rates or higher loan amounts. The activation fee is also included in this. An underwriting fee is a fee that the lender charges for “underwriting” the loan on your home and are also included in your closing cost. A buyer may also be charged a fee for their credit report if one was requested as part of the mortgage approval process.
An escrow is a separate account established to hold the monies associated with a real estate transaction prior to and after closing. These can include the earnest money, seller payments toward closing, prepaid private mortgage insurance, and property taxed. Escrow fees are the fees for someone to set up and maintain escrow accounts and pay out the monies when required.
Fees Related To Tax And Insurance
Prorated property taxes and homeowners’ insurance fees are included in this group. You also will see a transfer tax fee which could be anywhere from 1-3 percent of the purchase price of the property. The buyer and seller are both responsible for this fee and will split these costs. Depending on where you are, a seller might be dealing with withholding tax. Some states will tax nonresident sellers on the net proceeds of the sale of the property. In Colorado, this is a 2 percent tax for out of state real estate sellers. There is some exception, and there is an affidavit form that can be submitted to prevent the withholding.
How Can I Help?
If you would like a breakdown of more exact cost estimates contact me directly. Also, if you need more information of calculating closing costs reach out to me! I want to provide my clients with interesting and up-to-date information so they can make informed decisions. If you think that my expertise and positive attitude might be of service to you don’t hesitate to reach out and contact me!
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Residential Home Specialist & Global Luxury Specialist
Coldwell Banker Residential Brokerage North Metro Office