Typical Closing Costs

Arjun Kulkarni Jan 23, 2019
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It's natural for the closing cost to be more than the actual stipulated amount that you already knew about. The difference between the two depends on several factors, most of them being transaction-related. Read ahead to understand what goes into this cost of real estate.
While purchasing your home, there are other costs involved besides that of purchase of the property. And at the conclusion of the purchase, there are several other charges that need to be paid. These charges, which are to be paid over and above the price of purchasing a house, are known as closing costs.

Examples Of Closing Costs

Attorney Fees

Well, this one is a no-brainer. Your attorney was the one who helped carry out the deal and drew up all the documentation for the purchase of the home. These fees also have to be paid by the seller as even he has to draw up the documents for sale, with the help of his attorney.

Brokerage Commission

If you purchased the house or found the seller with the help of a broker, then his fees will also be a part of the costs. Brokerage commission is paid on account of the broker's service of getting the buyer and seller to meet and help them in the price negotiations of the property. This is typically paid as a percentage of the price of the house.

Recording Fees

These are paid to the government for recording the transfer of property from the buyer and the seller.

Stamp Duty

This is paid to government. As there is the buyer who gets the house, and seller who gets the money, stamp duty is paid on the transaction at the given slab rate.

Mortgage Application Fees

Mortgage application fees are also a part of the closing costs. These are generally paid by the buyer to the lender on account of processing the loan.

Pro-rata Property Taxes

Property tax is an annual tax paid to the local government by the homeowner. So, if the transaction is carried out in between the assessment period, then the new and the old homeowners both are liable to pay a portion of the property tax based on for how long each party will be holding the property.

Appraisal Fees

If the seller or buyer hires an expert to estimate the price of the property, then they obviously have to pay the required appraisal fees for the work done by the appraiser. This is one of the avoidable components because, if the buyer and seller themselves can negotiate the amount, then the need for a professional appraiser is redundant.

Inspection Fees

The buyer can choose to also overlook these fees. Inspection fees are paid to an expert to inspect the house for any pest problems, the foundation of the house, and the strength of the building. If the inspector suspects foul play with regards to the quality of the property, the buyer can be warned against purchasing it.
The amount of money you will have to pay depends on a variety of factors such as the cost of the property. This makes the total amount different for different locations, neighborhoods, and real estate agents that you approach the sale through.
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