Closing Costs Defined

Additional Fees: Extra fees included in your transaction my be the following:  Wire Fees, Tax Service, Survey Costs, Flood Certification, Settlement Charges, Messenger Fees, Sub-Escrow Fees, and Transfer Tax.

Appraisal Fee: This is a fee charged by an appraiser to look over the property and produce a report supporting what they believe is the true value of your new home. They do this to estimate whether or not your property is worth enough to support a loan.

Attorney Fee: You pay your agreed-upon attorney fee and sponsor attorney fee if purchasing new development. You may also need to pay the bank’s attorney fee. Your fees vary according to the type and monetary value of the property.

Condo Board Application or Co-op Flip Fax: This is the fee charged for processing condo applications or co-op shares.

Credit Report: Roughly $25 – $100 per report.

Document Preparation Fee: Charged for the preparation of paperwork by the bank or mortgage company.

Escrow: Money figured into a mortgage for certain conditions, such as taxes and insurance.

Inspection Fee: This is a fee charged to make sure your property is up to code and livable.

Homeowner’s Insurance: This is an insurance required to protect you against hazards, such as floods, fires, etc

Mortgage Insurance: This is an insurance that protects a lender from a borrower defaulting on their home loan. One usually only pays a PMI (Private Mortgage Insurance) when a loan has a downpayment of less than 20%.

Origination Fee/Points: A buyer can buy points if he/she want a lower loan rate. For example, one point tends to equal 1% of the total loan amount.

Prepaid Interest: This amount pays the interest due from the date of funding to the end of the month.

Recording/Transfer Fees: This fee covers the cost of changing the property title in official county records.

Title Insurance and Search: These are fees that are charged for a title search and insurance. A title search is used to verify that the person trying to sell the property is the true owner and that they have the right to sell the unit. Title insurance protects a lender from a lien or other problems with the title not disclosed at the time of sale.

Time Until Closing: A sale tends to take 3-5 months from close dependent upon mortgage financing, the condo/coop board approval and negotiations.

Recommended Amount To Put Down: Most properties require that 20%+ is put down on the property. Some can go as low as 10% if it is a condominium. Don’t forget to set aside additional money for closing costs and post-closing liquidity (usually 2 years of reserve in the bank).

Contract of Sale: This is a binding agreement between a seller and purchaser in which each party gives consideration to define the terms of the sale.