Closing costs are fees due at the closing of a real estate transaction. Both buyers and sellers may be subject to these fees, including appraisal fees, inspection fees, taxes, and more.
Here is an overview of the typical closing costs you can expect to pay when buying a home.
Application & Appraisal Fees
Some lenders will charge a mortgage application fee, which covers the cost of processing the mortgage application and all of the necessary paperwork. Application fees are an up-front cost that borrowers must pay when submitting the mortgage application.
Lenders also require an appraisal of the home to ensure that they are not lending more than what the home and property are worth. The buyer’s responsibility, appraisal fees cover the cost of having a professional appraiser look at a home and estimate its market value.
Inspection & Insurance
Lenders may require a home inspection fee to confirm that your home is livable and structurally sound. Paying for a home inspection also helps homebuyers gain a better understanding of the home’s condition.
If purchasing a home, you may be reviewing options such as mortgage insurance and home insurance. Both types are important, however, they cover different situations.
Mortgage insurance is used to pay the lender if borrowers default on their mortgage. If putting less than 20 percent down on the cost of the home, mortgage lenders may require that you purchase private mortgage insurance. However, this varies depending on which state or province you are buying in.
Purchasing homeowner’s insurance on the property is also a good idea to protect yourself in the event that something goes wrong with the home.
Escrow Fees & Taxes
As with any major financial transaction, homebuyers will be required to pay various taxes. Again, these will vary depending on where you are buying your home, but might include sales taxes, property taxes, transfer taxes, recording fees, title transfer fees, and more.
If you used a third-party escrow service to manage these fees or to hold your deposit during the closing process, you’ll also need to pay escrow fees prior to signing the final paperwork.
Marimark Mortgage is based in Tampa, Florida, and serves the mortgage needs of homebuyers, homeowners, and investors in Florida, Virginia, and Pennsylvania.
We specialize in mortgages for first-time homebuyers, conventional home mortgages, refinance loans, reverse mortgages, and FHA, VA, and USDA mortgage options. In addition, we’ve worked extensively with cash-out refinancing and help clients to lower their monthly mortgage payments.