Click the image to download a guide to customary closing costs.

Purchasing a home generally revolves around two things: emotion and money. In this post we’d like to address the money portion, in particular we’ll touch on closing costs. Customary closing costs are a huge part of buying a home and during the purchase of a home you’ll find escrow plays a huge part in calculating these closing costs.

Definition of Closing Costs: Fees and expenses, over and above the price of the property, incurred by the buyer and/or the seller in the property ownership transfer. Examples are title searches, closing services, loan fees and deed filing fees. Also called settlement costs.

Per the definition you can see there are two sides (buyer and seller) to the equation when determining closing costs. Below is a simple customary closing cost list. Keep in mind these are typical, but should not be considered hard fast rules, feel free to consult your real estate agent for more detail.

Typical Closing Costs for a BUYER:

  • One-half of the escrow fee (according to contract)
  • Lender’s title policy premiums
  • Document preparation (if applicable)
  • Tax pro-ration (from date of acquisition)
  • Recording charges for all documents in buyer’s names
  • Home Owner’s insurance premium for first year
  • Home Warranty (according to contract)Preview
  • Inspection fees (according to contract): roofing, property, geological, pest, etc.
  • All new loan charges (except those required by lender for seller to pay)
  • Interim interest on new loan from date of funding to first payment date

Typical Closing Costs for a SELLER:

  • One-half of the escrow fee (according to contract)
  • Work orders (according to contract)
  • Owner’s title insurance premiums
  • Real estate commission
  • Any judgments, tax liens, etc. against the seller
  • Any unpaid Homeowner Association dues
  • Home Warranty (according to contract)
  • Any bonds or assessments (according to contract)
  • Any loan fees required by buyer’s lender (according to contract)
  • Recording charges to clear all documents of record against seller
  • Payoff of all loans in seller’s name (or existing loan balance being assumed by buyer)
  • Interest accrued to lender being paid off, reconveyance fees and any prepayment penalties
  • Excise Tax (% based on county and sale price)

Buying or selling your home can be one of the biggest financial decisions of your life.  But knowing what to expect by being informed can make the process easier for you!

To download a single page guide to customary closing costs, click here!

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