What Are Closing Costs?

You've found your dream home, the seller has accepted your offer, your loan has been approved and you're eager to move into your new home. But before you get the key, there's one more step--the closing.

Also called the settlement, the closing is the process of passing ownership of property from seller to buyer. And it can be bewildering. As a buyer, you will sign what seems like endless piles of documents and will have to present a sizeable check for the down payment and various closing costs. It's the fees associated with the closing that many times remains a mystery to many buyers who may simply hand over thousands of dollars without really knowing what they are paying for.

As a responsible buyer, you should be familiar with these costs that are both mortgage-related and government imposed. Although many of the fees may vary by locality, here are some common fees:

Appraisal Fee: This fee pays for the appraisal of the property. You may already have paid this fee at the beginning of your loan application process.

Credit Report Fee: This fee covers the cost of the credit report requested by the lender. This too may already have been paid when you applied for your loan.

Loan Origination Fee: This fee covers the lender's loan-processing costs. The fee is typically one percent of the total mortgage.

Loan Discount: You will pay this one-time charge if you have chosen to pay points to lower your interest rate. Each point you purchase equals one percent of the total loan.

Title Insurance Fees: These fees generally include costs for the title search, title examination, title insurance, document preparation and other miscellaneous title fees.

PMI Premium: If you buy a home with a low down payment, a lender usually requires that you pay a fee for mortgage insurance. This fee protects the lender against loss due to foreclosure. Once a new owner has 20 percent equity in their home, however, he or she can normally apply to eliminate this insurance.

Prepaid Interest Fee: This fee covers the interest payment from the date you purchases the home to the date of your first mortgage payment. Generally, if you buy a home early in the month, the prepaid interest fee will be substantially higher than if you buy it towards the end of the month.

Escrow Accounts: In locations where escrow accounts are common, a mortgage lender will usually start an account that holds funds for future annual property taxes and home insurance. At least one year advance plus two months worth of homeowner's insurance premium will be collected. In addition, taxes equal approximately to two months in excess of the number of months that have elapsed in the year are paid at closing. (If six months have passed, eight months of taxes will be collected.)

Recording Fees and transfer taxes: This expense is charged by most states for recording the purchase documents and transferring ownership of the property.

Make sure you consult a real estate professional in your area to find out which fees--and how much--you will be expected to pay during the closing of you prospective home. Keep in mind that you can negotiate these costs with the seller during the offering stage. In some instances, the seller might even agree to pay all of the settlement costs.

We loved working with Seth! He was very professional, helpful and responded to every email/phone call quickly. His patience and organized way of working was extremely valuable to us on our journey of building our dream home. Thank you, Seth!
Kate & Ryan
Seth has a unique and in-depth knowledge in Boston and Winthrop especially, so accordingly he’s developed a tremendous network of expert folks in every area that even touches home ownership or the Boston experience in general, and they have all been so very helpful and knowledgeable as well.
And Seth is hands-down the MOST responsive real estate professional with whom we have ever dealt and we’ve purchased many, many houses though the years! This to us has been a game changer in terms of our expectations going forward as Seth has now set the bar very high.
He is a genuinely kind and helpful person who sincerely cares about his customers and his extended network. He made the entire process seamless, painless, and timely. We so appreciate Seth’s professionalism and willingness to help and answer or anticipate questions at every turn.
We are pleased to enthusiastically recommend Seth Williams for all your real estate needs!
Todd & Tara
Tara & Todd
You want your place sold for top dollar? You want to buy your dream home?  These are your guys. I worked with Seth selling my condo and buying a home at the same time. Seth couldn’t have been more on point. Always kept us in the loop with everything and made it as easy as possible. There’s   nothing easy about selling a place and buying one at the same time, but Seth was the guy that made it easy and possible for us. Give Seth a call and you won’t be disappointed!
Joe & Ang
Seth and his Team helped me buy my first home this summer. Not only my first home, the right home for my budget. The transaction was smooth. Seth's referral to his finance team gave me a rate that made the purchase that much better. Seths aggressive approach to swoop in and get the offer in before an open house weekend showed me how much he wanted to get me that home. Same effort went into negotiations after the home inspection. If you are ready to buy then Seth and his team will make it happen!
Jeff L
I had my condo in Winthrop listed with a different agency for over 3 months and had barely any traffic. I went ahead and decided to work with Seth and it was the best decision we made. He had foot traffic on very first weekend of his open houses and within a very short time frame, we had an offer and basically at asking price. I'm a real estate developer and Seth's team and operation are second to none in the industry! We're beyond satisfied and grateful! Thank you Seth
Steve Siuda
I used Ledge and Young to buy my first rental property in Winthrop. Seth was a great guy to work with. Very knowledgeable and down to earth. He was also able to refer me to a few different trades people that I have been using ever since. I will definitely be working with Seth again as I look to expand my multi family portfolio.
Ted K.
Seth is a great agent and my go to referral partner for the area. He is very knowledgeable and easy to work with.
Kenneth Er
The experience from the start was great. No issues, showed us what we wanted to see regardless of how far away they were. Helpful in all aspects of any and all questions amd concerns we had. Notified me immediately when there was any change or update throughout the entire buying process.

Ledge & Young was helpful and thoughtful during the process and make us feel comfortable during the closing period where we actually got to close earlier than scheduled which got us moved in quicker. I would recommend the Ledge & Young team to friends and family for great service and pride in what they do.

I became very friends with the team years ago when we first started the dreadful search in the crazy Boston market. I still keep in contact with these guys as they've gained my friendship amd respect personally amd professionally.

Home buying is a process and a half - and with the right team members you can rest assured that this team I was given was on their toes from the start and gained my confidence early on to a successful acceptance of our offer to the final signing on the closing documents!

Well done team. We thank you again.

Joe

Joe Callesano