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Closing
Costs
The
fees associated with the buying or selling of real property are
called closing costs. Certain closing fees are automatically assigned
to either the buyer or the seller; others are either negotiable
or dictated by local or state law.
In
addition, buyers and sellers frequently negotiate closing costs
including both major and minor fees. There's no right or wrong way
to negotiate closing costs. The most important this is to be sure
that the final agreed upon terms are in writing on the purchase
agreement.
Buyer
Closing Costs:
When a buyer applies for a loan, lenders are required to provide
them with a good-faith estimate of their closing costs. The fees
vary according to several factors, including the type of loan and
the terms of the purchase agreement. Some of the closing costs are
paid in advance. These are mainly based around the application fee
at the inception of the process. Some typical buyer closing costs
include:
•
The down payment
• Loan fees (credit report, application fee, points)
• Prepaid interest
• Inspection fees
• Appraisal
• Documentary stamps on the Note
• Mortgage insurance
• Hazard insurance
• Title insurance
Seller
Closing Costs:
The sellers most typical and important closing cost is any remaining
balance due on their loan on the subject property. Before the date
of closing, an escrow officer will contact the seller's lender to
verify the amount required to satisfy the loan agreement. This initial
loan balance along with an any other fees accredited to the seller
at closing must be paid before the seller may realize any proceeds
from the sale. Some typical seller closing costs include:
•
Broker's commission
• Transfer taxes
• Documentary Stamps on the Deed
• Title insurance
• Property taxes (prorated)
Prorations:
At the closing, certain costs are often prorated. The most common
proration is usually for property taxes. Property taxes are typically
paid in arrears. An example would be a property that sold mid-year.
Another example would be a property that had an in-place income
stream, like a lease.
We
hope this was an informative look into closing costs. Please contact
us for the latest in Miami Real Estate.
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