Fees to Expect When Buying, Selling a Home
By BankingMyWay.com Staff
When buying or selling a property, there are numerous fees you can expect. Buyers are often responsible for the most fees, but sellers often end up paying more because of hefty commissions.
Additionally, the down housing market has forced many sellers to pay part or all of a buyer’s closing costs to make the sale.
Though not exhaustive, here is a list of some of the fees you can expect to pay when buying a home. Depending on the lender, additional fees may be assessed. Get a good faith estimate for a loan prior to closing for full disclosure of all applicable fees. Compare fees between lenders to get the best deal. The Mortgage Section at BankingMyWay.com can help you find mortgage offers in our area.
- Loan Origination Fee: Usually 1% of the loan amount. Goes to the lender for preparing the loan.
- Points: Each point is equal to 1% of the loan amount. Points buy down the interest rate typically by 0.25% per point. They are tax-deductible.
- Application Fee: Goes to the lender or the broker to check credit and process the initial loan application.
- Attorney Fee: Goes to the attorney representing the buyer at closing.
- Appraisal Fee: Goes to the appraiser who determines the value of the property.
- Title Search an Examination Fee: Pays for the lender to research the property’s title to find out if there are liens and who the rightful owner of the property is.
- Mortgage Broker Fee: Paid to the broker for finding and arranging the loan on your behalf. Can be up to 5% of the loan amount but is usually much less. Should be negotiated prior to service.
- Inspection Fee: Not part of closing costs, this optional service is provided by a licensed home inspector. An inspection determines if the property is in good repair prior to the sale.
In addition, homebuyers have to come up with money for the down payment on the mortgage, property taxes, homeowner’s insurance and when applicable, private mortgage insurance.
- Broker’s Commission: The largest expense when selling a home, commissions paid to the realtor or real estate company are typically between 5% and 7% of the sales price. Commissions are negotiated by the sales agent but are generally split evenly with the buyer’s agent. Broker commissions can be avoided by selling the property “for sale by owner,” but this strategy can translate into lower sales prices and longer time on the market in some cases.
- Attorney Fee: This is paid to the attorney who represents the seller at the time of closing.
- Closing Costs: Title insurance and document preparation fees are often paid by the seller at closing. Sellers may have to pay more of the closing costs if that is part of the purchase agreement.
- Other Negotiated Fees: Additional seller concessions such as home warranty fees or points paid towards the buyer’s mortgage interest rate may also be a part of the purchase agreement.
Sellers may also have to pay a portion of the property taxes, pro-rated for how long they have occupied the property in the tax year.
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