When a buyer applies for a loan, lenders are required to provide them with a good-faith estimate of their closing costs. The fees vary according to several factors, including the type of loan they applied for and the terms of the purchase agreement. Likewise, some of the closing costs, especially those associated with the loan application, are actually paid in advance. Some typical buyer closing costs include:
1. The down payment
2. Loan fees (points, application fee, credit report)
3. Prepaid interest
4. Tax impound
5. Inspection fees
6. Appraisal
7. Mortgage insurance
8. Hazard insurance
9. ALTA Title Policy
If the seller has not yet paid for the house in full, the seller's most important closing cost is satisfying the remaining balance of their loan. Before the date of closing, the escrow officer will contact the seller's lender to verify the amount needed to close out the loan. Then, along with any other fees, the original loan will be paid for at the closing before the seller receives any proceeds from the sale. Other seller closing costs can include:
1. Broker's commission
2. Transfer taxes
3. Title insurance
4. Property taxes (prorated)
5. Documentary stamps on the note
In addition to the sales price, buyers and sellers frequently include closing costs in their negotiations. This can be for both major and minor fees. Likewise, a buyer may want to save on up-front expenditures, and so agree to pay the seller's full asking price in return for the seller paying all the allowable closing costs. There's no right or wrong way to negotiate closing costs; just be sure all the terms are written down on the purchase agreement.
At the closing, certain costs are often prorated (or distributed) to the date of closing. The most common prorations are for property taxes and loan interest. Taxes in Nevada are paid in advance. Interest on the loan is paid in arrears for the home owner and in advance for the buyer for the closing month only.
For more information please contact me at susanmorrow@homesvegas.com