Typical Closing Costs for Buyers
There are a lot of fees that will be assessed before and during a closing. These fees could be paid by either the Buyer or Seller, depending on prior negotiations or state law requirements, but typically most of it is paid by the Buyer.
All closing costs are outlined in a HUD-1 Settlement Statement that shows all actual charges imposed on the Buyer and Seller, which is provided to the parties prior to closing.
Following is a representation of most of the fees charged in connection with purchasing property, but it is not a meant to be considered a comprehensive list.
- Lender Fees/Mortgage Fees and Points – this amount can vary with each lender. Typical charges include application fees, credit report fees, and origination fees. There are no fees in cash transactions.
- Title Insurance Fees – various components of title insurance these fees include the Owner’s policy, the Lender’s policy, lien search, title exam, and closing endorsements. Owner’s policy fee is based on the amount of the purchase price – there is a fee of $575.00 up to the first $100,000 and thereafter a fee of $5.00 for every $1,000 over the first $100,000. So, if you purchase a home for $120,000 the Owner’s policy will cost $675. Lender’s policy fee can be anywhere from $100 to $200 (not needed on cash transactions). Other fees mentioned above should not exceed $500.
- Recording Fees (Deed and Mortgage) – it is $10 to record the first page and $8.50 for each additional page.
- Documentary Stamps and Fees – on all deeds and other instruments relating to real property or an interest in real property, a fee of .70₵ is chargedfor each $100 of value paid, also known as consideration; on all mortgages, a fee of 35₵ is charged for each $100 of the mortgage amount; and there is an intangible tax charged in the amount of 20₵ for each $100 of consideration.
- Brokerage Fee – $200 on properties $100,000 or less, and $295 on properties over $100,000.
- Survey – typical cost of a survey on residential property should not exceed $500.
- Home Inspection, Wind Mitigation and Four Point Inspection – the charge for a home inspection on a single family residence is often based on the square footage of the home. For a home that is 1,500 square feet or less, the cost is approximately $350 to $400. However, you must add to that the cost of a wind mitigation report and a four point inspection report, both of which will be required by homeowner’s insurance – the cost of each report is between $75 and $100 each.
- Pest Inspection Report – typical cost is $50
- Appraisal Fee – always required when a mortgage is needed, and can cost anywhere from $300 to $500.
- Homeowner’s Insurance – must pay 1 year’s premium up front on or before closing whether or not you have a mortgage. If you have a mortgage, in addition to the pre-payment, an amount equal to 1/12 of the annual premium will be calculated for a lender required escrow account, and a portion may be included in the closing costs. Cost of homeowner’s insurance varies depending on the location of the property (is it in a high risk flood zone?), the construction of the property (premiums on masonry block homes is typically less than premiums on wood frame homes), the age of the roof, the age of the windows, etc.
- Property Taxes – if you acquire a mortgage, a portion of the property taxes will be collected at closing to be placed in your lender required escrow account.