HOMEBUYERS GUIDE
Unraveling The
Mystery Of Closing Costs
By Beverly Mitchell
Homebuyers, particularly first
time buyers, are often surprised that
there are fees associated with the pur
chase of their new home or condo
over and above the price the seller is
asking for the house. These additional
costs are known as "closing costs,"
and include items that both buyers and
sellers are responsible for paying.
Typically, a buyer can expect to
pay various fees required by the
lender in connection with granting a
loan including origination fees, dis
count points, appraisal fees, credit
reports and lender inspection fees.
Additionally, lenders require the pre
payment of certain fees which are not
technically closing costs, but which
are generally paid at the closing of a
loan. These include escrow deposits
for taxes, insurance, interim interest,
hazard (homeowners) insurance and
flood insurance. The first year's haz
ard insurance is included among these
prepaid items.
.Other closing costs customarily
charged to buyers include: attorney's
fees for examination of the title and
preparation of documents; inspections
which the buyer may require to insure
that major units in the house such as
heating and air conditioning work; ter
mite reports; surveys; title insurance
premiums; and fees for recording doc
uments with the Register of Deeds or
other public officiaT
Although these costs are generally
considered buyer costs, buyers and
sellers can negotiate, for seller pay
ment of some of these costs. Such
negotiations generally take place
when government financing is secured
and most notably involve payment of
mortgage discount points.
Sellers also have fees at closing,
including seller-attorney fees for
preparation of deeds and other docu
ments, excise taxes (better known as
revenue stamps) and, if the seller used
a real estate agent, that agent's fee is
usually included and paid at the clos
ing by the closing attorney.
As indicated above, the parties
can negotiate on the payment of some
closing costs. When the buyer is a vet
eran utilizing a Veterans
Administration loan, certain costs
generally paid by buyers in closing
cannot be paid without prior approval
of the Veterans Administration. These
include loan discount or commitment
fees, well and septic tank inspections
and charges for copying, mailing or
long distance charges, among others.
Buyers are navigated through the
home buying waters by real estate
agents and lenders, and may delay
selection of a closing attorney until
after making a loan application.
However, buyers who are unfamiliar
with the process of home buying may
be wise to select the attorney early on
for consultation on closing costs, pro
cedures and other related matters.
Beverlv Mitchell is an attorney in
Winston-Salem.
/LCM LITTLE (Brok
632 Holly Avenue
Winston-Salem, N.C. 27101
(919) 725-3419
Custom Designs
Licensed General Contractor
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