Real Estate Closing Costs -  Plan On Them!
by Mark Walters

When buying or selling real estate closing costs can come as a shock. Here's an explanation of the various expenses:

Down Payment 
Most lenders require a down payment of from zero to 20% for a normal home purchase.

Lender's Loan Origination Fee 
Government regulations allow 1% origination fee on FHA or VA loans. Conventional loan fees can vary from 1 to 3 points or more. A point is 1% of the loan.

Appraisal Fee 
About $300-$500. Non refundable.

Credit Report 
$50-$60. Non refundable.

More below...

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Tax Service Fee
In some areas a charge of approximately $75 by a tax service company to verify to lender that taxes are actually being paid. 

Assumption Fee 
Fee of approximately $250 up to 1% of the loan balance charged by existing lender for permission to assume existing loan.

Pest Inspection Fee 
A fee of $100 - $175 is charged for inspecting property for wood destroying organisms (termites). Customary for the seller 
to pay.

Optional Fees 
At buyer's option: property inspections that cover foundation, electrical, plumbing and overall construction at a cost of $300-$400. Roof inspections cost $75-$125. Geological reports 
about $100. Septic $200-$400. Radon $50-$100. Asbestos 
$75-$125.

Title Insurance 
Cost determined by a rate chart and is based on the loan amount.

City Transfer Tax 
Imposed within the corporate limits of some cities. The VA does not allow the veteran buyer to pay any portion of this cost.

Miscellaneous Costs & Fees 
$150 should cover notary, recording documents, endorsements, etc. 

Hazard/Fire Insurance Reserve 
Two month's premium is usually collected for the impound account if required. Paid by buyer.

Prepaid Interest 
Interest must be paid from close of escrow to 30 days prior to the first regular mortgage payment. 

Mortgage Insurance 
Required on all conventional loans greater than 80%. Cost ranges from about 1/2% to 1% per year. 14 months premium is collected in advance. For benefit of lender in case of default.

Tax Impounds 
When new loan is going to have an impound account, lender will require from 2-10 months taxes be deposited in impound account.  If taxes are prorated, buyer's total charge for taxes should equal about six month's taxes.

Escrow Fee 
$750-$2500, depending on the sales price. Can be paid by buyer, seller or split. Everything is negotiable.

We have listed examples for typical closing cost. Closing procedures and costs vary from area to area. Your real estate agent and loan agent can provide estimated closing costs. Don't neglect to add them to all the other costs of buying real estate when determining the affordability of a property.

About The Author - Mark Walters has written "Single Family Homes - The No Risk Investment".

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