The Ugly Truth About What To Expect When You Close On A Home

Home buyers usually have a good idea of what their new home will cost, and how that cost fits into their budgets.  But as you learn about the extra fees that can come along with closing on a home — like titles, home inspections, and mortgages — suddenly that initial home price isn't the only thing you have to figure into the total closing cost.

In fact, with the extra fees, buyers can expect to pay between two and five percent more than the initial cost of the home.  

Fees To Expect At Closing

So, what kind of extra fees should you expect at closing?

1. Any applicable attorney fees.

2. Mortgage fees. These include the loan processing fee, the application fee, credit report fee, and the underwriting fee.

3. Home inspection costs.

4. Title search, land survey, and title record and title insurance fees. 

5. Property tax.

6. Transfer tax. Thirty seven states have transfer fees.  Missouri does not.  Arkansas and Tennessee do. 

7. Notary fee.

8. The escrow fee.

9. The interest from escrow to the first mortgage payment.

10. Homeowner's insurance.

Patience is a virtue at closing, as the process typically moves slower than you want it to. So allow plenty of time to complete the transaction.

What Happens At The Closing?

Here's what you should expect: The legal representative will have you sign mortgage and home ownership documentation, and you can ask last-minute questions before signing. 

Bring requested documentation to the signing, such as home insurance and proof of mortgage.  Some realtors have the title, loan processing fee, credit check fee and home inspections paid by the buyer before closing. After all of the paperwork is signed, the realtor will hand you the keys, and you can open the door to your new home!

Remember, you shouldn't be left in the dark about closing costs.  Your lender or realtor will give you an estimate on what to pay, and you should receive a HUD-1 form that describes the closing costs in detail. Be sure to do your homework on all of the associated fees involved before the closing date.  

And talk to your lender and realtor -- they're here to help! For more information about closing costs, other overlooked home-buying costs and anything else on home ownership, contact us.