What Are Closing Costs?

Closing costs are fees that are separate from the selling price of a property. They need to be paid at the time of closing and can involve escrow fees, title insurance premiums, tax prorations, loan fees, deed recording fees, real estate commission and more.

The buyer usually pays for:

  • Lender’s title policy premiums
  • 50% of escrow fee
  • Recording charges for all documents in buyer’s name
  • Tax proration (from date of acquisition)
  • Homeowners’ Association fees
  • All new loan charges (except those required by the lender for seller to pay or otherwise negotiated between buyer and seller)
  • Fire insurance premium for the first year

The seller usually pays:

  • Owner’s title insurance premiums
  • 50% of escrow fee
  • Real estate commission
  • Document recording and release fee for deed of reconveyance
  • Any loan fees required by buyer’s lender
  • Payoff of all loans in seller’s name or against the property
  • Interest accrued by lender being paid off, statement fees, reconveyance/release tracking fees and any prepayment penalties
  • Any judgments, tax liens, etc. against the seller — including the cost of recording the release document
  • Any and all delinquent taxes

Take a look at the Buyer/Seller Guide we’ve put together for more information on what happens during the purchase or sale of a property.

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