Whether you’re buying or selling a home, you’ll be hearing about closing costs. We know that these real estate vocab words can be confusing, so we’re here to break down what you need to know about closing costs.
What are closing costs?
Closing costs are fees paid by both a buyer and a seller at the closing of a real estate transaction. These fees will vary based on the property and purchase price.
Who facilitates final closing costs?
The lender will disclose final closing costs to the buyer at least three days prior to closing.
The title/escrow company will disclose final closing costs to the seller at least 24 hours prior to closing.
Both buyers and sellers have the right to reach out to multiple lenders and title/escrow companies to find the best rates for their transaction. Selling or buying a home is an important decision in your life! Make sure to research the companies you’re working with well.
Buyer’s Side
What is the role of the mortgage company or lender?
The mortgage broker or lender will work with the buyer to determine how much of a loan they can qualify for. They will help shop for the best rates to get the client the best deal for their financial situation. Closing costs are taken into consideration when determining the qualifying loan amount.
Typical Lender Closing Costs
- Lender fees
- Loan origination fee, broker compensation
- Appraisal fees
- Lender title policy
- Settlement agency fee
- Government taxes
- Prepaid expenses such as property taxes, homeowners insurance, and interest until your first payment is due
- HOA fees
Seller’s Side
Title/Escrow’s Role
Title/escrow is a third party that helps facilitate and complete the real estate transaction. They ensure that legal title is transferred properly and convey the selling interest between both the buyer and seller. Title will disclose the seller’s closing costs.
Typical Seller Closing Costs
- Listing and selling agent commission
- Owner’s title policy (In the state of UT)
- Settlement agency fee
- Mortgages recorded on the property
- Liens/judgements recorded on the property
- HOA fees
- Assessments
When are closing costs paid?
Closing costs will be paid at the end of a real estate transaction during the time of disbursement/funding in escrow.
Seller closing costs are typically covered by the closing proceeds of selling a home. These fees will be taken from the closing proceeds of the transaction prior to them being issued to the seller.
If you owe costs as a buyer, escrow will accept your funds wired to them directly. However, depending on your unique situation, closing costs can be incorporated into a loan or covered by lender and seller credits.
Now you know!
You’re an educated home buyer or seller! Congrats!
Buying or selling a home can be a stressful process. Finding the best team to help streamline the process and provide support will be the key to success.
When listing your home with Homie Real Estate™, remember to choose Homie Title™ for a simplified closing experience!
Homie Real Estate™ and Homie Title™ have a business relationship in that all are owned by the same persons.