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Common Closing Costs
for Buyers
The bundle of fees associated with the buying or selling of a home are
called closing costs. Certain fees are automatically assigned to either
the buyer or the seller; other costs are either negotiable or dictated
by local custom.
Your lender must disclose a good faith estimate of all settlement costs.
The title company or other entity conducting the closing will tell you
the required amount to bring to the closing.
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Typical Buyer Closing Costs
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Down payment
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Loan origination fees
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Points, or loan discount fees you pay to receive a lower interest
rate
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Appraisal fee
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Credit report
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Private mortgage insurance premium
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Insurance escrow for homeowners insurance, if being paid as part
of the mortgage
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Property tax escrow, if being paid as part of the mortgage.
Lenders keep funds for taxes and insurance in escrow accounts as they
are paid with the mortgage, then pay the insurance or taxes for you.
Note: when financing more than 80% (LTV), escrowed property
taxes and insurance are required, which will increase your
monthly mortgage payment.
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Deed recording fees
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Title insurance policy
premiums
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Survey
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Inspection fees—building inspection, termites, etc.
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Notary fees
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Prorations for your share of costs such as utility bills and
property taxes
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A Note About Prorations
At the closing, certain costs are often
prorated (or distributed) between buyer and seller.
Because such costs are usually paid on either a monthly or yearly
basis, you might have to pay a bill for services used by the sellers
before they moved. Proration is a way for the sellers to pay you
back or for you to pay them for bills they may have paid in advance.
The most common prorations are for property taxes. This is because
property taxes are typically paid at the end of the year for which they
were assessed.
Thus, if a house is sold in June, the sellers will have lived in the
house for half the year, but the bill for the taxes won't come due until
the following year. To make this situation more equitable, the
taxes are prorated. In this example, the sellers will credit the buyers
for half the taxes at closing.
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