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Closing costs can seem daunting but they don’t have to be. This guide will help you become well informed before you start your home buying journey. When you buy a house, there are numerous fees and taxes you will be paying. Some may be rolled into the mortgage loan total (or added as escrow accounts) and paid off with your monthly mortgage payments. Other fees will be due upon closing along with your cash down payment for the mortgage. These are what are known as “closing costs.”
Who Pays Real Estate Closing Costs?
Some closing costs will be paid by the home buyer and others will be covered by the seller. Closing taxes and fees—as well as the closing process itself—can vary greatly from state to state. It is always best to consult with your mortgage lender to get an accurate quote for all fees, taxes and lending expenses associated with your specific home loan. This can usually be provided in a Good Faith Estimate when you are first pre-approved for your mortgage.See How Easy it is to Get Your Custom Rate!
Closing Attorney Fees
One of the most prominent one-time closing costs for home buyers is the attorney fee for closing on a house. On average, attorney fees for real estate transactions will range from 2-4% of the property’s final purchase price. Again, the attorney fee amount can be different in each state. It may be a set percentage of the mortgage amount, or it could be a flat fee.
There are two primary attorney fees associated with a home purchase: the buyer’s attorney fee and the lender’s attorney fee. Both will be part of your final closing costs and due upfront. As a home buyer, it is important to make sure you have the cash to cover both your down payment and any additional upfront closing fees and taxes such as the attorney fees. Here is a full list of closing costs you will want to prepare for, so ask your lender for a more accurate quote:
• Credit Report
• Escrow Fee or Closing Fee
• Title Company Title Search
• Survey Fee
• Flood Determination
• Courier Fee
• Title Insurance (Lender’s Policy and Owner’s Policy)
• Homeowner’s Insurance
• Buyer’s Attorney Fee
• Lender’s Attorney Fee
• Escrow Deposit for Property Taxes
• Escrow Deposit for Mortgage Insurance (if applicable)
• Transfer Taxes
• Recording Fees
• Processing Fee
• Underwriting Fee
• Loan Discount Points
• Pre-Paid Interest
• Pre-Paid Property Tax
• Homeowner’s Association (HOA) Transfer Fees (if applicable)
It sounds like a lot. Many of these fees are very minor and not all will be required for your specific real estate transaction. It will depend on your location, your lender and who conducts the closing. The point is there will be additional closing costs beyond your down payment. You need to be prepared to pay in order to finalize your mortgage loan and fund your home purchase.
Now, let’s take a deeper look at the attorney fees and what they cover when closing on a house.See How Easy it is to Get Your Custom Rate!
Buyer’s Attorney Fee
The fee itself will depend on the state where you are buying your house. It is paid to a lawyer who specializes in real estate transactions. They will prepare and review all closing documentation on behalf of the buyer. You are essentially paying this attorney fee for your own protection. A third-party lawyer will be able to review the mortgage loan contract to make sure everything is properly prepared and legally binding.
Lender’s Attorney Fee
In most real estate transactions, the borrower will also pay the lender’s attorney fee. This is standard practice in the lending industry. The lender’s attorney will be reviewing the documentation on behalf of the mortgage lender. This process and the fees involved will vary between states. At first glance, it may seem odd that you, the borrower, has to pay this additional fee on behalf of your lender. However, it is a very common requirement.See How Easy it is to Get Your Custom Rate!
Where you want to be careful is if the lender’s attorney fee you are quoted seems unusually high. Don’t be afraid to bring any concerns with your mortgage lender. Also consider getting lending quotes or going through the pre-approval process with multiple lenders and mortgage brokers. You may be quoted different attorney fees and closing costs, so review the contracts carefully and choose the lending solution that is right for you.
If you have questions about buying a home and securing a mortgage loan—including all closing costs and other recurring taxes and fees—we’re happy to help.See How Easy it is to Get Your Custom Rate!
Contact Moreira Team | MortgageRight today to get started with your mortgage pre-approval or to ask any questions on your mind. We are very upfront about all pricing and processes. Our goal is to help home buyers make informed decisions every step of the way.