10. Understanding Closing Costs
Closing costs are charges that are paid when ownership of a property is transferred. These costs cover all the services required to process the transaction, including title work, appraisals, inspections, document preparation, recording fees and other expenses. In many cases, there are also loan origination fees (charged by the loan officer to find right loan and secure approval) that are part of closing costs.
At closing, buyers typically pay a percentage of the purchase price for closing costs and another percentage for prepaid items. Please talk to your lender for details of all the fees.
- Loan origination fee, points, document prep, underwriting fees
- Appraisal, credit report, inspections
- Settlement fee, title/abstract search, title insurance premium, owners title insurance policy, title recording fees
- Mortgage registration tax
Prepaid items for first-year costs of homeownership
- Homeowners’ insurance premiums, property taxes
Most home sale transfers (closings) can be anywhere from 30-90 days but the typical closing period is 60 days. A buyer must keep in mind their mortgage rate lock and if they have a deadline for their mortgage pre-approval.
The actual closing appointment that involves signing the contracts and handing over checks and keys will only take about an hour. Once all contracts have been signed and the loan has funded, you will receive the keys to your new home. Whether you intend to move in immediately, or do work to prepare it for move in, the home will be officially yours!