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Closing Costs Explained

PURCHASE LOANS

The costs of closing a real estate transaction generally include the following: Title & escrow fees, lender fees, points (an optional expense), appraisal fees, credit fees, insurance and taxes.

In a purchase transaction the party responsible for paying the big ticket closing costs, the title, escrow fees and transfer taxes, is determined contractually (refer to your purchase contract). Typically the party who pays is based upon the custom of the county in which the property is located. For example, one counties custom may require that the buyers of property pay the title, escrow fees and transfer taxes while another may require the seller to cover the expenses and yet another may require that the fees be split 50-50. When purchasing new construction and you are working with a builder, the builder may or may not pay your title, escrow fees and transfer taxes regardless of the county custom (depending upon prevailing market conditions). It is important to first know the custom of the county in which you are buying and to refer to your purchase contract to determine the fees you are responsible for and have agreed to pay.

TITLE & ESCROW FEES

Include both the owner's and the lender's policy of title insurance as well as the escrow fee. Title insurance protects both the buyer and lender by insuring a clear chain of title, that the persons with the legal right to convey title to your property are the ones who have actually done so. Also, some polices protect against the occurrence of fraud and forgery.

The escrow fee is a service fee charged by the title company for acting as an independent third party in facilitating your transaction and insuring that all parties to the transaction perform as contractually agreed to.

Other title fees include the fee to notarize your loan documents (the notary fee) the fee required to record your deed of trust with the county recorder's office (the recording fee), as well as miscellaneous drawing, courier and express mail fees.

You may call the title company handling your purchase, provide them with the purchase price and loan amount you're requesting and they can supply you with an accurate fee quote based on the specifics of your transaction.