realestatetalks

Did you know that closing cost only accrues when a seller conveys title of a property through a real estate contract? Execution of the purchase agreement through changing of deed of ownership, transfer of funds, and signatures of all parties results in an action commonly called a “closing”.

The closing cost is paid at the closing of the transaction are:

• Title service cost
• Recording fees
• Document or transaction stamps or taxes
• Survey fees
• Brokerage commission
• Mortgage application fees
• Points
• Appraisal fees
• Inspection fees
• Home warranties
• Prepaid insurance
• Pro-rated property taxes

The title search is most important of these simply because it ensures several things that are important to the ownership being conveyed.

• Title search ensures the individual who is selling the property owns the property and can convey title.
• Title search ensures that there are no judgment and/or liens on the property.

The recording fee is the fee charged to file an official recording of the change ownership.  The instrument used to convey ownership is a deed, so the charge is for filing a new deed. 

Home warranty can be paid for by party, the buyer or the seller.  A home warranty ensures major household systems against repair or replacement for a least a year after purchase of the home. 

Pre-paid insurance is paid for by the buyer.  The insurance protects both the buyer’s personal assets and the property that the buyer is purchasing. 

Document or transaction stamps or taxes are not necessary in all states. However, if required it must be paid at the closing of the transaction.  The document or transaction stamps or taxes are simply an excise tax charged by the government when change in ownership occurs.

Survey fees are charged if a buyer requests a survey.  It lets the buyer know the boundary of the land that is being conveyed. 

Brokerage commission is the compensation to the brokerage company for brings the two parties, the buyer and seller, together. 

Mortgage application fees are paid tot the lender.  It covers the cost of processing your loan application. 

Points are paid by the buyer to the lender to lower the buyer’s interest rate on the loan.

Appraisal fees are usually paid for by the buyer to the appraiser.  The appraiser gives the lender a professional evaluation of the value of the home that the buyer is purchasing. 

Inspection fees are usually paid for the buyer for a home, pest, or inspection that the buyer deems is necessary so that the buyer can ascertain the condition of the property. 

The title cost is an important and necessary cost in purchasing a home so it is important that the buyer understand what the cost covers. 

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