By: Meghan Carroll
I read this article on how much closing costs typically are by state and thought I would use this infographic to expand on the topic of closing costs.
One question I am asked often is “What (or how much) are closing costs?” If you are not a seasoned buyer or seller, this number can sometimes be shocking. Better to be prepared with this information before you start your home buying or selling journey, so you are not blindsided before you get to the closing table.
Can buyers roll closing costs into their home loan?
Unfortunately not. It’s not possible to do this with Conventional, FHA or VA loan programs.
What are closing costs?
Closing costs are the fees required for processing your home loan. The amount paid can range from 2%-6% of the loan amount. Both buyers and sellers are subject to these fees.
A few days before your closing, you will be given a document called the closing disclosure. This document will break down, line by line, all the fees (and credits) associated with setting up your loan and cost to close.
CLOSING COST EXAMPLES
FOR BUYERS:
Loan Fees
- Loan origination fees
- Document Review
- Credit report fee
- Interest points buy down
- Processing Fees
- Underwriting Fee
Taxes
- Deed Recording Fee (city/county)
- State Tax
Pre-paid Fees & Escrow Related Fees
As security for funding the bulk of your home loan, your lender/bank will require a few things to be paid up front. This is fund is created to act as a cushion for various costs which will arise.
- Prepaid interest
Your first mortgage payment is typically not due until the month AFTER you close, but the lender will still require you to pay the interest on the loan.
- Homeowners Insurance
Lenders will require you to have homeowners insurance and will require you to pre-pay for a one-year policy prior to closing.
- Property Taxes
Lenders will also require that a few months of taxes are paid upfront.
- Title Fees
Title search fees
Owners Title Insurance
- Homeowners Association Fees (HOA)
If HOA is present on your purchase, these fees may also be required:
HOA Initiation Fees
Capital Contribution Fees
Reserve Fees
Attorney fees: This is a flat fee.
OTHER FEES:
- Appraisal fees (this likely be paid up front/prior to closing)
- Survey fee (this might be required to be paid up front/prior to closing)
- Flood certification fee
- Courier/delivery fees
- Notary fees
- Wiring fees
As a buyer, what is needed the day of closing?
Your driver’s license and money, either a cashier’s check OR proof of wire transfer.
The check/wire amount will be = your down payment (minus earnest/escrow deposits made after attorney review + closing costs -minus adjustments (ex. seller credits, lender credits, tax proration)
FOR SELLERS:
Closing costs for sellers will vary depending on the sales price of the home.
Here are some fees that will be deducted off the sales profits on the home.
- Realtors commissions (varies and is negotiable)
- Attorney fee
- Real estate transfer tax (the state of NJ charges this to sellers and it’s usually less than 1%)
- Deep preparation (handled by real estate attorney)
- Settlement fee (title company charges for handling the closing. This fee is split with buyers)
- Mortgage payoff fees: (release fee, overnight fees, etc. to handle remaining balance on mortgage)
- NJ Non-Residence Tax (This is a.k.a. “NJ Exit Tax” – if you own a home in NJ that you are selling but NJ is not your primary state of residence, the state will require you to pay a 2% non-residence tax. This 2% goes to the NJ division of taxation. If you are not selling your property at a gain, you may be able to apply for an exemption of this fee.)
- Prorations – taxes, HOA fees, etc.
- Certificate of Occupancy and/or Smoke Certification (varies by town)
- Other possible fees:
- Outstanding liens
Wire transfer fees - Seller concessions/credits towards closing
📲If you’d like more clarify on these fees or anything about the home buying or selling process, call/text me: 732-508-7402 #BuySellRentWithMC
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