It’s important to understand closing costs from both sides to ensure there are no surprises during your home transaction. But as a homebuyer, just what do each of your closing fees mean? We break down the typical homebuyer fees for you below:
At its core, a home appraisal is a professional assessment of the value of a property. As a buyer, this can tell you how well the home is priced versus how much an appraiser thinks it is worth. It’s also an integral measurement your bank or lender considers when determining how to structure your loan—or whether to give you a loan at all. Appraisers consider the size and features of the home (e.g., square footage, number of bedrooms, etc.), as well as its location, the home’s current condition as observed by the appraiser, and recent sales information for similar properties.
While it may sound similar on the surface, a home inspection is different from a home appraisal, but just as important. During the home inspection, a licensed home inspector will evaluate the visible and accessible systems and components of a home to give you a better understanding of their condition. This often includes the home’s structure, exterior, roofing, plumbing, electrical, heating and air conditioning, interiors, ventilation and insulation, and fireplaces. The home inspector does not address the cost of any recommended repairs or guarantee the home complies with local building codes.
A property survey is not a required examination of the property you’re purchasing, but could be helpful if you have questions about the boundary lines, zoning classification, or rights-of-way for the property. Property surveys indicate the lot size and boundaries, as well as a written description of the property. The surveyor will also certify that your structures do not violate any local size or proximity guidelines and show you where any underground utility lines are, which could be helpful during any future excavation or construction.
Prorated Property Taxes
Unlike the calendar year, the tax year runs July 1–June 30. Unless you’re closing on exactly that that endpoint, your last installment of property taxes will be for only a portion of the time period. The purpose of proration is to fairly determine where your responsibility for the property taxes ends and where the home buyer’s begins. At closing, if you have not yet made a payment which is due, you are charged with the amount for your portion of the installment. If you last tax payment covered a time period beyond the close of escrow, you are credited for the proration.
Prorated Homeowners Association Fees
As with taxes, the period for your homeowners association (if you have one) may not line up exactly with your closing date. Prorating your HOA fees ensures that you do not overpay for services beyond your ownership of the property.
Home Loan Origination Fees
Similar to any commission-based payment, home loan origination fees are charged up front by your lender as compensation for putting your home loan into place. Fees are often quoted as a percentage of the total loan and average 0.5-1.0%.
Recording Fees for Deed and Deed of Trust
As the buyer, you may be responsible for any recording fees to satisfy the deed or deed of trust. When a property deed is transferred to you as the new homeowner, the documents must be recorded at your county’s Register of Deeds. In Buncombe County, the recording fee for deeds of trust is $56 for the first 15 pages and $4 for each additional page.
Attorney Fee for Closing
You may need to hire an attorney to review the terms negotiated in your purchase contract. An attorney, as opposed to a title company, may handle your closing, as well. These fees usually amount to $500–$1,000, but may be more depending on your situation.
In a nutshell, title insurance protects against loss or damage resulting from defects that affect the title to your home. When you buy a property, the previous owner conveys the title to you as evidence of your full legal ownership. Occasionally, a hidden defect in the title or a mistake in a prior deed, will, or mortgage may give someone else a legal claim against your property. If such a claim is made, title insurance can save you time and money by covering legal expenses and any claims that arise from issues prior to your ownership.
Typical Seller Fees
While you, the homebuyer, are responsible for your share of closing costs, the home seller pays several closing costs, too. Here are the typical closing fees covered by the home seller:
- Real estate commission
- Prorated property taxes
- Prorated homeowners association fees
- Attorney fee for deed preparation
- Any recording fees to satisfy the dead of trust
- Attorney fees, including faxes, copies, and courier to pay off the mortgage
- State revenue stamps
- Home warranty (negotiable)
Beverly-Hanks is Committed to You
Your Beverly-Hanks associate works directly with you to make certain deadlines are met, documents are distributed, and all details are accounted for. Our proactive management and attention to detail will help make sure your home purchase is efficient and seamless. Click here to learn more about buying your home with Beverly-Hanks & Associates.