The Anatomy of a Closing

 The closing day should be the happiest day for both seller and buyer! Whether you're buying or selling a home, don't be shocked by unexpected costs the day that you assume or relinquish ownership of your home. These hidden surprises may cost you hundreds or even thousands of dollars. To avoid costly and unplesant surprises, read this report to help educate you on the process and the costs related to a typical "Closing" on the purchase and sale of a home.

Eliminate the shock right at the start.  Typical closing costs can be as high as 3% to 5% of the purchase price in addition to your down payment when a new loan is created to buy a home. Closing costs are typically much lower if you are assuming a loan. As a home seller, you're closing costs maybe as high as 10% of the purchase price to include the Real Estate commission. Remember that closing costs are negotiable and a seller may agree to pay some of a buyer's costs to help wrap up the sale.

The closing process begins when the contract is signed and when the "underwriter" opens a file at the buyer's mortgage company. The Mortgage Company is then responsible to prepare the loan documents then send these documents and instructions to the closing attorney's office. The closing attorney can only prepare for the closing after this occurs.

Buyers: Responsible to have at the closing attorney's office your original contract, a picture ID, termite letter, your mortgage company's Good Faith Estimate, your new homeowner's insurance documents, and a cashier's check or Money Order for the amount your lender stated you'll need.

Sellers: Take with you to the closing attorney's office a picture ID and your original contract. If you are incurring a loss on the sale of your home, the attorney will tell you the exact amount of a cashier's check to take to closing.

Here is a snapshot of the typical costs associated with a closing.

Loan Origination Fee: This fee is charged to the buyer by the lender for creating the loan. It is typically a percentage of the loan amount such as 1% or 2%. Ask your lender for a written estimate of the origination fee. Ask your lender for a Good Faith Estimate.

Appraisal fee: The Mortgage Company will hire a licensed appraiser to ensure that the purchase price of the property has a fair market value. This cost is passed on to the buyer and can be up to $350. The Credit Report fee is usually collected along with the appraisal fee at the time of loan application. The credit report fee can be as much as $75.

Attorney's Fee: Typically paid by the buyer, this is paid to the closing attorney for the title search (checking county records to ensure the property title is not contested) and for physically handling the closing for both parties. Attorney's fees range up to $550. Remember that the attorney represents the lender at the closing. Some attorney's may charge a binder fee of $50-$75 to prepare the title for the lender.

Survey Fee: The lender may require a survey to locate the boundaries of the building and the property lines. It also shows utility easements, underground sewer lines, encroachments, fence placements, and other items. If required, the cost can be up to $350. The survey fee cost is negotiable however, a survey is highly recommended. The seller should pay this if it is required to clear the title.

Owner's Title Insurance: An optional cost, it protects the buyer in the unlikely event that something was overlooked in the title search, or a document was misfiled, or a fraudulent act occurred in the past. The cost can run as much as $600 and depends on the purchase price. It is a prudent choice for a buyer.

Real Estate Commission: Usually paid by the seller however, in the process of negotiation, a buyer may agree to pay a portion of it

Prepaid Fees: Paid by the buyer, these are fees paid in advance which the lender asks to cover a stated period of time such as three months of homeowner's insurance, property taxes, or mortgage interest.

Recording Fees: The buyer usually pays for recording the deed and loan papers however; the contract should specify who is to pay these charges. The cost can be up to $75. Each county has a specific formula for this fee.

Home Warranty: An optional but a prudent expense, a home warranty will protect a homeowner from unexpected major repairs to the Air Conditioner, Furnace, Water Heater or

Other major systems during the first 12 or 13 months of ownership. Cost is about $365.

Georgia Per Loan Fee.  This is a $6.50 buyer cost charged by the State of Georgia.

Miscellaneous Charges: Other charges which may appear at your closing are tax service fee, Courier fee, notary fee, flood certification fee, document preparation fee.  This can be as high as $600.

Transfer Tax.  This is a required seller fee when you sell your home in Georgia and is based on $1 per every thousand dollars of the sales price.

Power of Attorney.  If required, this cost is about $75.

Sellers should bring the legal description (Warranty Deed) to the closing.

Other Fees charged by the Lender are:

Tax Service Fee            about $75
Doc Prep Fee                $200-$350
Underwriting Fees         $200-350
Courier Fee                   $50
Flood Certification        $25
Title Exam                     up to $180