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Common Closing Costs for Buyers
A 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 at the time of closing, ask the Title Company about a wire transfer. Common closing costs include:
- Down payment
- Loan origination fees
- Points, or loan discount fees
- Appraisal fee
- Credit report
- Private mortgage insurance premium
- 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, they then pay the insurance or taxes for you.
- Deed recording fees
- Title insurance policy premiums
- Survey
- Notary fees
- Prorations for your share of costs, such as property taxes
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 6 th of the month. You would owe the gas company for only the days from the 6 th to the end for the month. The seller would owe for the first five 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.
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