What determines your closing costs when buying a home?

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Dear Tilly,

We are looking into buying a home and I’m curious what determines the closing costs when buying a home.

Sincerely,

the Closing Costs

Dear Closing Costs,

Great question!

Whether you are flipping a home to sell immediately or buying a home for your family to live in for years to come, one inevitable thing you can’t escape when purchasing a home, is the closing costs. The process of buying and selling of properties involves different stages, but that particular point in time at which the contract is actually executed and the title to the property is conveyed to the buyer is known as the “closing”. And in the real estate market, it is a usual thing for a variety of cost associated with the buying and selling of the property to be incurred by either the seller or the buyer. These costs are typically paid at the tail end of the transaction and are referred to as closing cost. These are additional costs that will have to be paid along with the net price of the property being purchased. Closing costs vary widely, based on where you live, property you want to buy and some other important factors as well.

What determines your closing costs when buying a home?

Agency fee

This is one of the determinants of the total closing cost to be paid on a purchase property. Agency fee represents the fee that is to be paid to either the real estate agents or realtors involved in the transaction process. Estate agents / realtors are team professionals who specialize in the business of buying and selling of lands and properties and their fees are usually charged based on a specific percentage on the NET selling price of the property.

Agreement / legal fee

These are sometimes referred to as attorney fees. The cost incurred here is use to prepare the legal papers.

Title search fee

This search fee is typically charged for verification of the titles and other documents on the property being sold. Buyers are advised to verify property documents from the respective local government authority before making final payment.

Title insurance

This cost varies by location. Getting title insurance is essential, as it assists to protect the lender against any future legal problems. It helps to ensure that the title to your property is free and clear at the time of the sale.

Recording fee

This fee also depends on the location of the property. This is the fee which will have to be paid to a county or city in exchange for recording the new land records.

In addition to this, other fees such as brokerage commission, mortgage application, appraisal and survey fees are other important factors that can determine the total closing costs when buying a home.

Good luck!

ask-tilly FirsTrust Mortgage

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