If you’ve been through the process of buying or selling a house or you’ve refinanced your current home, you’ve had to pay closing costs. In the state of Virginia, title companies are used for closings. During your transaction with them and settling on the house, you most likely got a document from them that looked like this, listing out everything that you’d be paying for at closing. Maybe you didn’t quite understand it, or maybe you’re a first-time homebuyer and need to know what all you’ll be paying for at closing. Here’s a breakdown of many of the costs for buyers.
Breakdown of Closing Costs
- Points – Points relate to financing and may or may not be charged by the lender. One point equals 1% of the loan amount. For example, a loan amount of $500,000 with one point would equal a fee of $5000 charged at closing. Your loan officer will help you determine the best financing options available to you based of your application.
- Underwriting – The underwriting fee is paid to the lender for their research to determine whether they will approve you for a loan.
- Appraisal – This is a prepaid fee for an appraisal of the home you want to buy to make sure the value of the home is equal to or greater than the sales price of the home.
- Credit report – The credit report fee is another prepaid fee charged by the lender examine your credit report and decide if you are credit-worthy and have a track record for the repayment of current debt.
- Prepaid interest – This amount is stated on the closing documents to get the interest paid up through the first of the month.
- Flood certification – Virginia requires a flood certification, a small fee, for residential property sold in Virginia. It determines if the property is located in a flood zone and the type of zone. If the property is within a flood zone, you will need flood insurance.
- Pest/Termite inspection – This charge is for the inspection for termites and other wood- destroying pests and determines if any treatment needed. The inspection fee can be paid by the buyer or seller.
- Property survey – Some lenders require a property survey to determine the property’s boundaries. The fee is usually paid by the buyer.
- Lender’s title insurance – This is the cost of the lender’s policy, which protects their investment against title claims and boundary issues. This is paid by the buyer.
- Owner’s title insurance – This is an option cost that is typically paid by the buyer to cover additional title and boundary claims.
- Settlement agent fee – This fee the closing fee charged but the settlement agent or title company. It is a fixed price fee. The buyer and seller each pay a fee for facilitating each side of the closing.
- Document Preparation – Legal papers, such as the mortgage and the deed of trust, have to be prepared before closing. This fee covers the cost of that preparation and is paid by the buyer.
- Notary – This fee is paid to a licensed notary by the buyer. The notary is needed to witness the person’s named in the documents signing the document.
- Recording fees – This fee covers the legal recording of the transfer of title to the new homeowner which includes the deed and the mortgage lien, if applicable.
- Homeowner’s insurance premium – Homeowners’ insurance protects you and the lender against loss due to fire, weather or other hazards. A lender will require the prepayment of a one-year policy coverage effective on the date of closing to reduce risk from loss.
- Homeowners’ association transfer fee – If you are buying into a planned unit development with a homeowner association, there will be a transfer fee paid at closing for the set-up of a new account for the buyer.
Looking for real estate services in Gainesville, Haymarket or Bristow? Contact your local real estate expert Belinda Jacobson-Loehle of Jacobson Realty and Home Staging in Gainesville, Virginia today. Also be sure to sign up now for a FREE copy of my eBook, “The Real Estate Key – What You Need to Know!”
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