Recurring Closing Costs

These are the costs that you may have to pay out at closing, but that you’ll also be responsible for on an ongoing basis as a home owner.

• Property Tax - This will be paid at closing if the seller has pre-paid any of the property taxes for the period after you take possession of the home. If your mortgage lender requires that you put your property taxes in escrow, one or two month’s payments may also be required at closing.
• Mortgage Insurance - If you’ve taken out a high ratio mortgage (with less than 20% down) you may be required to have it insured. You may need to pay the full premium upfront or just the taxes. The same applies if you choose to take creditor protection to help you with your mortgage in case of illness or death.
• Home Owner’s Insurance – To protect you against fire or flood, at the time of closing you will be required to prove that you have insurance in place. Some lenders will require that you pre-pay premiums for the whole year.

If you have any questions about recurring closing costs or any other mortgage related questions, we can help! Please contact us for a free mortgage consultation.

Non-Recurring Closing Costs

Non-recurring closing costs are those that you will pay once when you close upon your home, but you will not have to worry about them again until you choose to make another purchase.

Non-recurring closing costs can include the following:

• Home inspection - This is one of the first closing costs you will have to pay as a buyer. If you make an offer on a home conditional upon a satisfying inspection, you typically have under a week from the offer date to have it completed. This is a cost you as a buyer have to pay even if you choose to withdraw your offer because you’re not happy with the results of an inspection.
• Title insurance - This is insurance that compensates for any losses that are a result of a defective title or liens on the property that should have been revealed at the time of purchases. Losses covered include any legal fees paid to rectify related issues. Title insurance can be taken in lieu of a title search which is much more pricey and in many cases, unnecessary. A real estate lawyer will advise buyers if a title search is needed rather than title insurance.
• Appraisal fee - Before a mortgage lender will provide you a loan, they complete a property appraisal to ensure that your home is worth at least as much as they’re going to lend you. Often today this can be completed without surveying the property as banks can look at recent valuations in the area online, but a fee does still apply and the cost can vary depending upon the appraisal method used.
• Attorney fees - Your attorney is the one that processes all of the necessary paperwork, registers the deed, deals with the seller’s lawyer, processes information for the bank, and makes sure all necessary money gets to the appropriate bodies. For all this, a real estate lawyer charges a flat fee for his or her services.
• Escrow fees – Some mortgage lenders may require that you put the costs related to the mortgage payment, property taxes and utilities into an account to be paid by them on a monthly basis. This helps them ensure that their investment is protected because payments are made. At closing, you may be required to deposit escrow fees for one or more months of expenses.
• Land transfer fees - Most cities or counties (or both) require that you pay a fee to ‘transfer’ the land from the seller to the buyer. The specific costs and requirements vary greatly across the country but typically apply.
• Various administrative fees – As a buyer you may need to pay the fees to record the sale, fees for document preparation, and any charges that surface from the need to use wire transfer or a courier to get the transaction completed.