Remember everything is negotiable; therefore, a contract can be structured so that the costs of the transaction can be paid by either party. However, there is what is known as “a normal and traditional method of dividing closing costs.” Those traditions, for this area described below.
1. Loan Fees:
These are the fees charges by the lender in connection with the loan, such as the appraisal, credit report, flood cert, tax service fee, processing and document prep fees among other lender fees depending on the lender. They should all be disclosed on the lender’s Good Faith Estimate.
2. Interest paid in Advance:
The per diem interest on the Buyer’s loan from the date of closing through the end of the month. Thereafter, interest is paid in arrears. .
The first year’s premium must either be paid prior to closing or collected at closing. We recommend that the Buyer pay in advance to guarantee availability of coverage on the day of closing.
The amount that the lender determines must be collected at closing to initially fund the escrow account. Normally this is three months of property taxes and insurance.
5. Closing Fee:
This is a state required fee. This fee is to the title agent for preparing and conducting the transaction. This fee includes document preparation, closing, notarizing, copy packages, recording of documents, ordering payoffs, etc.
6. Mortgagee’s or Lender’s Title Insurance:
When the loan amount is less than or equal to the sales price and issued simultaneously with an Owner’s Policy, the Mortgagee’s Policy (or Loan Policy) can be issued at a flat rate. With the normal endorsements that are required by the lender.
We prefer to order the survey because we can control the quality and delivery. In addition, the companies we work with give us what we feel is a very competitive price. A normal house survey will run $300-$375; if the house is in a flood zone, add $50-$100 for an elevation certificate. If the property is larger, a metes and bounds method was used, or if the Surveyor runs into complications, the charge may be more.
8. Termite Inspection:
If required by lender or if borrower chooses to have one performed.
9. Recording Fees:
The Buyer pays for the recording of the deed and the mortgage. Recording fees are $10.00 for the first page and $8.50 for every page thereafter of the document being recorded.
10. Documentary Stamps and Intangible Taxes on the Mortgage:
These fees are paid to the Clerk of the Circuit Court when the mortgage is recorded and is based on the loan amount. The Doc Stamps are $3.50 and the Intangible Tax is $2.00 per thousand.
11. Miscellaneous Fees:
There are normally some incidental charges for couriers or wiring; generally these fees are less than $100.