ABC's of Closing
Navigating the world of real estate can be complex, especially when it comes to understanding closing costs. To shed light on this crucial aspect of home buying and selling, we've compiled a list of essential closing cost terms for both buyers and sellers. Whether you're a first-time homebuyer or a seasoned real estate pro, this list provides clarity on the terminology surrounding the financial aspects of property transactions. Explore these definitions to make informed decisions during your next real estate endeavor.
Appraisal Fee
The cost of a professional appraisal to determine the property's market value
Buyer's Agent Fee
The fee paid to the buyer's real estate agent for their services in representing the buyer's interests.
Closing Costs
All the fees and expenses associated with the transfer of property ownership, including lender fees, title charges, and more.
Down Payment
The initial payment made by the buyer, typically a percentage of the home's purchase price.
Escrow Money Deposit
A deposit made by the buyer as a show of good faith when making an offer on a property.
Escrow Account
A neutral third-party account where funds are held during the closing process until all conditions are met.
Home Inspection Fee
The cost of a professional inspection to evaluate the property's condition.
Lender's Title Insurance:
An insurance policy that protects the lender's interest in the property.
Origination Fee
A fee charged by the lender to cover the cost of processing a mortgage application.
Private Mortgage Insurance (PMI)
Insurance required if the buyer makes a down payment of less than 20% to protect the lender against default.
Real Estate Transfer Tax
A tax imposed by the state or local government on the transfer of property ownership.
Seller's Agent Fee
The fee paid to the seller's real estate agent for their services in marketing and selling the property.
Title Search
The process of searching public records to confirm the property's ownership and check for any outstanding liens or claims.
Underwriting Fee
A fee charged by the lender for reviewing and evaluating the mortgage application.
Walkthrough Inspection
A final inspection conducted by the buyer before closing to ensure the property is in the agreed-upon condition.
Wire Transfer Fee
The cost associated with transferring funds electronically during the closing process.
Please note that the specific closing costs and their amounts can vary depending on the location, lender, and individual transaction. It's essential for home buyers and sellers to carefully review their closing statements and seek guidance from professionals in the real estate and legal fields when necessary.
