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All About Closing Costs


By Guest Author Greg Davidson, Licensed Mortgage Originator

Closing costs are fees that are paid as part of a real estate transaction. Because buying a home is a contract between a seller and a buyer, and the property changes hands, there are various costs and several people involved.

In most cases, there are four categories of closing costs:

Lenders Costs
To obtain a home loan, there are costs incurred by the lender to pay the processor, underwriter, and closer. These costs are generally passed on to the buyer. There may also be loan origination fees depending on the type of loan the buyer is getting.

Third Party Expenses
Credit reports, property appraisals, inspections, etc. are paid to a third party vendor for providing or performing these services.

Legal Fees
Attorney’s fees, title search fees, title insurance, and recording fees are costs that may fall into this category.

Pre-Paid Expenses
Interim interest, homeowner’s insurance, and property taxes are ongoing costs of homeownership that may be paid in advance, upfront at closing.

In some situations, it can be negotiated in the purchase contract to have the seller pay some or all of the closing costs. Your real estate agent can help you negotiate this, but the more you know about closing costs before you apply for your mortgage, the better!


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