Closing Costs on a House

Real property is transferred from the seller to the buyer through a real estate contract, signed in the presence of an impartial witness, the solicitor and legal advisors of both the parties. During the transaction, the point at which the contract is actually executed and the title of property being sold and purchased is finally transferred to the buyer is known as the closing. While the miscellaneous collection of fees and charges that the buyer must pay to the seller before closing of the contract at the lawyer’s office are called closing costs. It may be noted here that the closing costs are above and beyond the price of the property itself.

Closing costs are not defined and may vary from case to case, depending on the type of property being conveyed and the nature of the deal. It is recommended to check with your real estate agent to be sure about the costs you will be required to bear when buying your new home. However, usually the closing costs include all or some of the expenses listed below.

Legal Fees

This is the fee for the legal counsel and is to be paid by either or both parties.

Registry Fees

It is the cost of registering the change of ownership at the Registry Office, a government entity. This fee is also incurred by either party.

Appraisal fees

It is the cost of the appraisal carried out by the mortgage lender. This cost is paid by the buyer to a licensed professional appraiser, appointed by the mortgage lender.

Survey Fees

These are the fees for the survey of the property, if required by the mortgage lender, and are paid by either party.

Interest Adjustment

This is the interest charged by the mortgage lender for delay in the first mortgage payment. The delay in payment is usually because the actual closing does not fall on the specified closing date. This is paid by the buyer, but the seller is required to reimburse the former.

Fuel Equalization

It is the cost of furnace fuel left behind by the current owner of the house, and is paid by the buyer to the seller.

Property Taxes

Property taxes for the balance of the year are calculated and are paid by the buyer while the previous taxes related to property are paid by the seller.

Points

Points are paid by the buyer to the mortgage lender. Points are a form of pre-paid interest that the mortgage lender charges as an alternative to charging a higher interest rate on the loan.