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Closing Costs Confusion?
April 10th, 2018 10:43 AM

Barbara’s Blog:

The HUD Settlement Statement was changed to a Closing Statement, but there is still some confusion to sellers and buyers when trying to determine if the figures are correct.  Although, a Realtor or Title Company will be able to explain the line items, here is a list to simplify what is typically charged.

Title Search:  covers the cost to confirm the seller owns the property, and it is free from liens.

Title Insurance:  protects the lender and (optionally) you if title claim surfaces later.

Survey Fee:  is charged to verify property boundaries.

Flood Certification Fee:  covers the cost to determine if the home is in a federally designated flood zone.  If it is, the lender will require the purchase of flood insurance.  Some lenders also charge a separate flood monitoring fee to check for flood map updates.

Closing or Settlement Fee:  paid to the title company, attorney or escrow company that conducts the closing.

Recording Fee:  Paid to the state to record the transfer of property from one owner to another.

Transfer Tax:  Paid to the state, based on the amount of the mortgage.

Prorated Property Tax:  covers property taxes from the date of closing to the end of the tax year.

Homeowners’ Insurance:  typically, the charge is the first full year cost upfront at closing.

Homeowners’ Association Transfer Fee:  Paid on properties governed by associations to transfer ownership documents to the new owner.

Initial Escrow:  the lender may require the first two months of next year’s homeowners’ insurance, flood insurance and property taxes to build up a reserve. 

If a mortgage is involved in the sale, there are many other costs involved, such as appraisal fee, origination fee, Private Mortgage Insurance for loans with less than 20% down, prepaid interest and other various costs.  Be sure to go over ALL costs associated with closing on a home to assure that there are enough funds to cover the expenses and a smooth closing. 

Written by Barbara Doeringer

 


Posted in:Real Estate
Posted by Allen Doeringer on April 10th, 2018 10:43 AMPost a Comment

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