Closing costs for buyers

Surprise charges at close of escrow are never fun. Here is a good list of the general items you can expect to see. The lender must disclose a good-faith estimate of all settlement costs. A check to cover your closing costs will probably have to be a cashier’s check. The title company or other entity conducting the closing will tell you the required amount for:

  • Down payment.
  • Loan origination fees.
  • Points, or loan discount fees you pay to receive a lower interest rate.
  • Appraisal fee.
  • Credit report.
  • Private mortgage insurance premium if necessary.<
  • Insurance escrow for homeowners insurance, if being paid as part of the mortgage.
  • Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, and then pay the insurance or taxes for you.
  • Deed recording fees.
  • Title insurance policy premiums.
  • Survey.
  • Inspection fees: building inspection, termites, etc.
  • Notary fees.
  • Prorations for your share of costs such as utility bills and property taxes (see below).

A Note About Prorations:
Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance.

For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6th of the month. You would owe the gas company for only the days from the 6th to the end for the month. The seller would owe for the first 5 days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.