What are Closing Fees and Who Pays For them?
Buying a house entails several fees to be completed. After the down payment, there are still many more fees to be paid to close a sales transaction. Closing transactions are very important fees to be paid before a house or a property sale can be finalized. So, what are the closing costs, and who pays for them?
Closing costs include mortgages, transfer fees, property fees, HOA fees. There are also title company fees, attorney or legal fees, and lenders’ fees. The buyers usually pay most of the fees but the sellers also have some fees for them to shoulder.
Some people are unaware that closing costs are very significant. Some real estate transactions are delayed or even canceled when the closing costs are too much for the buyer or seller simply because they have not prepared for it. Closing costs should always be taken into consideration when buying or selling a house.
Different Closing Costs
Closing costs take care of all legalities in real estate transactions. Clean and problem-free transfer of title is one of the main benefits of taking care of all the closing costs.
1. Transfer Fees
The transfer process is the stage where the transfer of the property is officially recorded in the municipality to ensure the legality and validity of the sale. This is one of the main costs during closing.
Property tax is the annual amount paid by a landowner to the local government or the municipal corporation of his area.
3. HOA Fees
This fee is paid monthly by the owner of the property to the association within the community. Complete payment should be made during the closing.
4. Agent’s Commissions
Usually, agents’ commission ranges from 3 – 5%. There are usually 2 or more agents in each house sale. They come from the buyer and seller sides.
This is a fee paid to the appraiser for determining the current value of the property to make sure that the selling price of the property is equal to its current market value. Also, it is one of the lender’s requirements for loan approval.
6. Title Company Fee
Title companies ensure a clean title and clean title and transfer of ownership that would give protection to the buyer and the seller.
7. Lender’s Fees
Aside from an annual interest, lending companies also ask for a specific fee for the service they render. This is for the administrative task included in processing the loans.
8. Attorney and Other Legal Fees
Some house purchases require other legal documents made by an attorney for the protection of either the seller or the buyer. Some properties have unique legal concerns that require an attorney’s expertise.
9. Other Miscellaneous Fees
Mailing a document, notarization, and printing are some of the menial costs that are also part of the closing costs. While this might be very little in amount, it doesn’t hurt to prepare for it and put them in records like the other fees.
Who Pays for the Closing Costs?
A particular fee or the whole closing cost can depend on the negotiation made by the buyer and the seller. Nonetheless, there are standards that we can follow when it comes to delegating the payments. Typically, the buyers pay way higher closing fees than the sellers.
In general, all costs related to the loan, the property, and the required insurance policies are paid by the buyer. These include mortgage, insurance, property taxes, appraisal fees, and lender’s fee. When combined, these fees make up most of the total closing costs.
Sellers pay the title company fees as well as the other legal fees concerning the sale. They must also pay for the agents’ commissions for both the buyer and the seller side. Other fees included in the sellers' list are property taxes and the HOA fees, depending on when the closing has taken place.
3. Property Taxes and HOA fees
These fees could be paid by the seller or the buyer or both depending on which time of year the property was closed or the previous payments paid within the year. If taxes have already been paid, the buyer will owe the seller repayment for the portion of the taxable year after the closing, but if they haven’t been paid, the seller will pay the buyer for the period before the closing. Use the same process for determining who owes whom for Homeowners Association (HOA) fees.
It is important to include closing costs at the very start of selling or buying a house. Closing costs are not much of a burden as long as you have prepared for them in advance. Also, you have to remember that paying all the closing costs is beneficial for the seller and the buyer. These will prevent any legal concerns or house liens in the future.
Do You Have Questions About Your Real Estate Transactions? You Need an Expert!
For any inquiries or other concerns, do not hesitate to contact us thru www.ronsellsthebeach.com, our website, or call us at (386) 871-7697. Our agents are well-trained and fully capable of answering real estate queries. They will immediately accommodate you and will be happy to assist you.