Three Important Things to Know About Real Estate Closing Costs
When you buy a home, you deal with a category of expenses referred to as the closing costs. These are funds, additional to and separate from the down payment on the loan, that you pay at the time of settlement. Usually, these closing costs end up being between 3% and 7% of the total price of the home.
Different states have variations on the closing costs, so costs vary from place to place. If you pay closing costs in cash, you may get a reduction. A real estate attorney can advise you through this process.
Here are three points to remember.
#1. The seller pays the real estate commission
This is where the real estate agent makes his or her money. This real estate commission on the sale comes from the owner selling the property. The amount is deducted from the proceeds of the sale and is paid in the form of a check to the real estate companies, both those that listed the property and those who sold it.
#2. The buyer pays the mortgage fees
These fees include the mortgage broker’s fee and the mortgage insurance. They also include the cost for the application, for the credit report, and origination points as well as discount points. The origination points are what pay the mortgage broker or the lender. The discount point lowers the interest rate. Each discount point costs 1% of the total loan amount. Some of these fees can be amortized.
#3. The buyer usually pays for the property appraisal
At the time of the inspection, the buyer (or potential buyer) usually pays the appraiser. Sometimes, an anxious seller may offer to pay more of these closing costs, including the appraiser, but most often it is assumed that the buyer will hire the appraiser.