What Are Closing Costs?

You've found your dream home, the seller has accepted your offer, your loan has been approved and you're eager to move into your new home. But before you get the key, there's one more step--the closing.

Also called the settlement, the closing is the process of passing ownership of property from seller to buyer. And it can be bewildering. As a buyer, you will sign what seems like endless piles of documents and will have to present a sizeable check for the down payment and various closing costs. It's the fees associated with the closing that many times remains a mystery to many buyers who may simply hand over thousands of dollars without really knowing what they are paying for.

As a responsible buyer, you should be familiar with these costs that are both mortgage-related and government imposed. Although many of the fees may vary by locality, here are some common fees:

Appraisal Fee: This fee pays for the appraisal of the property. You may already have paid this fee at the beginning of your loan application process.

Credit Report Fee: This fee covers the cost of the credit report requested by the lender. This too may already have been paid when you applied for your loan.

Loan Origination Fee: This fee covers the lender's loan-processing costs. The fee is typically one percent of the total mortgage.

Loan Discount: You will pay this one-time charge if you have chosen to pay points to lower your interest rate. Each point you purchase equals one percent of the total loan.

Title Insurance Fees: These fees generally include costs for the title search, title examination, title insurance, document preparation and other miscellaneous title fees.

PMI Premium: If you buy a home with a low down payment, a lender usually requires that you pay a fee for mortgage insurance. This fee protects the lender against loss due to foreclosure. Once a new owner has 20 percent equity in their home, however, he or she can normally apply to eliminate this insurance.

Prepaid Interest Fee: This fee covers the interest payment from the date you purchases the home to the date of your first mortgage payment. Generally, if you buy a home early in the month, the prepaid interest fee will be substantially higher than if you buy it towards the end of the month.

Escrow Accounts: In locations where escrow accounts are common, a mortgage lender will usually start an account that holds funds for future annual property taxes and home insurance. At least one year advance plus two months worth of homeowner's insurance premium will be collected. In addition, taxes equal approximately to two months in excess of the number of months that have elapsed in the year are paid at closing. (If six months have passed, eight months of taxes will be collected.)

Recording Fees and transfer taxes: This expense is charged by most states for recording the purchase documents and transferring ownership of the property.

Make sure you consult a real estate professional in your area to find out which fees--and how much--you will be expected to pay during the closing of you prospective home. Keep in mind that you can negotiate these costs with the seller during the offering stage. In some instances, the seller might even agree to pay all of the settlement costs.

If you would like to know how we help buyers buy home with LITTLE TO NO MONEY OUT OF POCKET, then call us 757-774-6069 or fill out form below. 


Describe the Home You're Looking For

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Local Area Home Search July 9, 2020
3511
Listed
62
Avg. DOM
$158.54
Avg. $ / Sq.Ft.
$292,900
Med. List Price
3511 Properties
Page 1 of 293
$335,000
Subdivision: All Others Area 62
4
Beds
2F11/2
Baths
2,653
Sq.Ft.
2006
Year Built
2
Days on Site
10329139
MLS
Looking to move into an innovative home and entertain this weekend? This naturally lighted home is outfitted with Nest Smart home technology, surround sound wired throughout, ethernet ports, 120"...
$164,900
Subdivision: Cavalier Manor
3
Beds
2
Baths
1,124
Sq.Ft.
1940
Year Built
2
Days on Site
10329384
MLS
Beautifully newly remodeled corner lot. Kitchen features granite countertops, stainless steel appliances, and eat-in area, gorgeous floors throughout, vinyl 2 years old, newer HVAC, and a bonus room...
$165,000
Subdivision: Willoughby Beach
2
Beds
2
Baths
1,275
Sq.Ft.
1988
Year Built
2
Days on Site
10329471
MLS
No description available...
$192,500
Subdivision: Princess Anne Plaza
4
Beds
1F11/2
Baths
1,624
Sq.Ft.
1961
Year Built
2
Days on Site
10329470
MLS
Great opportunity for sweat equity. Priced to sell, this home has a tremendous location to go with 4 bedrooms and 1.5 bathrooms. Roof new in 2016, A/C and gas furnace new in 2012. Also has utility...
$250,000
Subdivision: Prentis Place
5
Beds
3
Baths
2,250
Sq.Ft.
2020
Year Built
2
Days on Site
10329467
MLS
No description available...
$349,900
Subdivision: River Shore
3
Beds
2F11/2
Baths
2,848
Sq.Ft.
1955
Year Built
2
Days on Site
10329473
MLS
You will fall in love with this freshly updated brick ranch in a beautiful waterfront community! Come check out the huge, open floor plan perfect for entertaining. The Half Acre wooded lot provides...
$340,000
Subdivision: Olde Mill Creek
4
Beds
2F11/2
Baths
2,738
Sq.Ft.
1997
Year Built
2
Days on Site
10329234
MLS
Check out this beautiful home located in the desirable neighborhood Olde Mill Creek! Upon walking in, there is an inviting foyer with an office and separate formal dining room at the front of the...
$389,000
Subdivision: Hillpoint Greens
5
Beds
3F11/2
Baths
3,310
Sq.Ft.
2005
Year Built
2
Days on Site
10329032
MLS
No description available...
$285,000
Subdivision: Chesapeake Beach
2
Beds
1
Baths
900
Sq.Ft.
1993
Year Built
2
Days on Site
10329168
MLS
Rare, once in a lifetime opportunity. BOTH halves of a stand alone all brick condo 3 blocks from the beach! Each with a 4 car driveway, all appliances and a huge yard to share. In a golf cart...
$349,900
Subdivision: Etheridge Manor
4
Beds
2
Baths
1,909
Sq.Ft.
1983
Year Built
2
Days on Site
10329208
MLS
Honey stop the car .. Look at that brick ranch in Etheridge Manor. Great curb appeal. Move in ready! Kitchen cabinets are wood and plenty of them. Smooth top range. Newer vinyl replacement window...
$285,000
Subdivision: Chesapeake Beach
2
Beds
1
Baths
900
Sq.Ft.
1993
Year Built
2
Days on Site
10329128
MLS
Rare, once in a lifetime opportunity. BOTH halves of a stand alone all brick condo 3 blocks from the beach! Each with a 4 car driveway, all appliances and a huge yard to share. In a golf cart...
$459,900
Subdivision: Farmington
4
Beds
3F11/2
Baths
3,795
Sq.Ft.
1991
Year Built
2
Days on Site
10329325
MLS
A lot of updates with a first-floor nice size bedroom with a full bathroom next to it. Here are just a few of the updated: double oven, cooktop stove, granite countertop 2019, garage doors 2019,...