Closing Cost Explained

Closing costs are a list of charges a lawyer or a title company representative presents to you on the closing date of your home.  Sometimes people are surprised at the additional cost over and above the price of their home.

It is more typical for the Buyer to cover the closing costs as those costs cover the appraisal work, origination fees, possible attorney’s fees, and title insurance to name a few things. Of course, who pays what can vary by state.

Below you will find a brief explanation of these costs.  Please note these are some of the closing costs you may encounter depending on your specific situation.  Use this as a guideline then talk with your Realtor who can provide a more realistic estimate for your situation.

    • Appraisal Fee Generally Required with New Homes.  An appraisal provides the lender with a professional opinion of the market value of the property.  This cost is normally the responsibility of the buyer and it can cost between $300-$400.
    • Home Inspection Fee Generally Required with Resale Homes.    A professional inspection of the home, top to bottom is for the benefit of the buyer. A home inspection can cost anywhere from $350 – $400 and is well worth the investment.  
    • Closing Costs with Title Company.   Closing fee with the title company  ($200-$300), recording the deed ($20-$30), recording the mortgage -if necessary ($80-$100).
    • Title Insurance Fee.  A unique form of insurance, title insurance protects your ownership or title against losses suffered because of undetected or unknown title defects for as long as you own your home.  There are instances, such as real estate fraud, where your title can come into question even if you are the rightful owner of a home.  From the day of closing to the day you sell your home, title insurance continues to protect your ownership.  In the event of your death, coverage is also offered to heirs who receive your home.  
    • Legal Costs and Disbursements.  Lawyers and notaries charge fees for their services involved in drafting the title deed, preparing the mortgage, and conducting the various searches.