The first time you purchase a home, someone will hopefully warn you about closing costs. You know, those final fees you have to pay before your house officially becomes yours. 

Closing costs can certainly be a pain point for some, especially when you’ve put as much of your savings as possible towards the down-payment.  Many homebuyers are left wonder: 

What exactly is the closing cost? And why does it exist? 

Closing Cost Definition 

Closings costs are fees paid when you officially seal the deal on a real estate purchase. That is, when the title is officially transferred from the seller to the buyer. 

Who Pays for the Closing Costs? 

Both the buyer and the seller pay their own sets of closing costs. The buyer generally has more line-items to buy, but the seller’s total is typically more. The buyer generally has a larger number of charges because of the loan they take out, the inspections they have done, and the background/credit checks they go through. 

The seller, on the other hand, has a shorter list of expenses but handles the real estate commission. 

Typically, a buyer can expect to pay 2 – 5% of the purchase price in closing costs. A seller can pay 5 – 8%. The buyer and seller may negotiate on sharing some of the costs, ultimately changing the amount. 

When Do I Find Out What My Closing Costs Are? 

As a buyer, you should receive a cash-at-close estimate when applying for your mortgage. This might not be the exact dollar amount, but it will give you a pretty solid idea. 

You should find out the exact cost 3 business days before your close. 

What Do Closing Costs Consist of? Where Does the Money Go? 

The closing costs you’re charged vary from person to person. Much of it depends on your mortgage, inspections that were done, etc. 

These are some of the most common charges: 

  • Appraisal fees 

  • Home Inspections 

  • Underwriting services 

  • Surveying 

  • Attorney fees 

  • Credit report 

  • Title insurance 

  • Application fees 

As you can see, closing costs go to external sources. That means these are all in addition to the cost of the home and in no way go towards your mortgage. Closing costs are added expenses. 

Take Control of Your Closing Costs with an Experience Real Estate Agent 

Too often, home buyers (and sellers) are caught off guard by unexpectedly high, last minute closing costs. With the right real estate agent, you can be better prepared, and may even be able to negotiate for lower closing costs. 

If you’re looking for a house for sale in San Diego, contact us at Metro San Diego Realty. Our team is highly experienced in the art of real estate closing. 

Posted by Jason Coriano on
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