January 5, 2021
You have decided to buy a house, made an offer and had it accepted, made a deposit and/or down payment, and secured a loan. You may think you are done spending money on the home purchase, but you can’t forget about closing costs.
While you were waiting for escrow to close, third parties were performing services on your behalf (or at least to get the transaction finalized), and those parties need to be paid for their services. “Closing costs” are those fees due at the close of a real estate transaction which are in excess of the purchase price of the house, such as real estate commissions, taxes, record filing fees, loan-related fees, property-related fees (appraisals and home inspections), title fees, escrow fees, and insurance premiums.
The estimated closing costs must be disclosed in advance. They are included by lenders in mortgage applications and loan estimates, and again in closing disclosure forms closer to the close of escrow. The amount varies depending on the loan type, mortgage lender, and your state, but they typically range anywhere from 2% to 9% of the purchase price. They are typically a one-time out-of-pocket expense. Both buyers and sellers typically pay closing costs (for different things).
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This article is based on the law as of the date posted at the top of the article. This article does not constitute the provision of legal advice, and does not by itself create an attorney-client relationship with Eskridge Law.