Closing costs are fees due at the “closing” of escrow, the point when the title to the home is transferred to the new owner. Typically, both seller and buyer will incur closing costs, though the parties may negotiate how the costs are allocated. If you’ve been on the market for homes for sale in Vacaville or homes for sale in Fairfield, then closing costs matter.
In most cases, the majority of closing costs will be paid by the buyer as many of the fees are related to mortgage financing and title and escrow services. Prior to closing, the escrow company will provide both the buyer and seller with settlement statements showing all the costs and credits due the buyer and seller.
Some of the seller’s obligations due at closing:
- Paying the commission due to the real estate agents for coordinating the sale and transfer.
- Sellers customarily pay the city and county transfer taxes due at sale.
- Miscellaneous seller charges such the Natural Hazard Disclosure report, home warranty, and HOA transfer fees are paid at this time.
Here are some of the more typical closing costs the buyer is responsible for at closing:
- If you are obtaining a loan for the purchase, you will likely pay the lender an application fee, a credit report fee, an underwriting fee, a mortgage insurance down payment, and the lender’s broker fee. These fees would not apply, of course, if you are paying cash for the purchase.
- The fee from the escrow company is customarily paid by the buyer (although it’s negotiable), as well as title insurance. Title insurance protects the buyer if there is a defect in the title, such as discovering at a later time that someone other than the seller was the owner of the property. Title insurance is extended to the lender in most cases to protect its interest in the property for the same reason.
- If you had property inspections done – roof, pest, whole-house, etc. – and the costs were billed to escrow, those costs will have to be settled at closing, as well.
- The buyer will need to reimburse the seller for prepaid fees such as property taxes and HOA assessments. The buyer becomes responsible for these fees going forward.
It’s important to stay updated on closing costs when handling homes for sale in Vacaville or homes for sale in Fairfield. Closing costs can vary greatly, depending on the value of the home being purchased, local tax rates, and the negotiated allocation of costs. For sellers, these expenses can usually be deducted from the profit from the sale of the property. The buyer, however, should anticipate that some out-of-pocket expenses will come due at the time of closing. Generally speaking, the buyer should assume that closing costs will be about 3-5% of the purchase price and plan accordingly. Fees charged (or waived) by lenders can also make a difference in your closing costs, so it’s a good idea to shop around to compare the rates and fees offered by various lenders when searching for homes for sale in Vacaville and homes for sale in Fairfield.