General Closing Costs
Denis Le Marchant-Smith
Buyer closing costs are low for a cash purchase, typically under $1000. There are also a number of pre-payments that may appear on the closing statement. It is possible to give a general guide to these costs, but it is important to bear in mind that these are only approximations, and actual costs may vary.
Annual property taxes will range from $2,500 for smaller condos up to $6,000 or more for larger pool homes. As these are paid in arrears the taxes for the current year up to closing will often (except close to the end of the year) appear as a credit to the buyer from the seller. The buyer will have to pay the full year's taxes at the end of the purchase year.
Buyers title insurance is most commonly paid by the seller. Some lenders will decline to pay what would otherwise be seller's costs. The cost of title insurance is typically around $600 per $100,000 of the purchase price.
Documentary stamp duty on the deed is calculated on the basis of $7 per $1000 of the contract price. If financing is taken, there is additional duty and tax of $5.50 per $1000 of the mortgage amount. This cost is borne by the seller. Recording fees and other costs paid by the buyer are relatively small, usually under $500.
HOAs are increasingly charging a transfer fee to the buyer at closing in addition to any advance HOA fees.
If the seller has already paid the annual property taxes, the buyer typically reimburses the seller for the period in which the buyer will be occupying the property. Likewise, if the taxes have not yet been paid, the seller typically reimburses the buyer for the period in which the buyer occupied the property.
Transfer Taxes and Recording Fees
This is the cost for transferring ownership of the property and recording the purchase documents. The fee is often calculated as a percentage of the sales price.
This insurance covers replacement costs for damages caused by fire, wind or other disaster that might affect the value of the property. Typically, the insurance also covers personal liability and theft.
This policy protects both the buyer and lender by insuring a clear chain of title. (In other words, it ensures that that the person who sells the house has the legal right to do so.)
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