Closings costs or settlement costs are an accumulation of separate charges paid to different entities for the professional services associated with buying and selling of real estate. Closings costs vary according to sales price and loan amount.
Some of the items associated with closing costs are:
1. Title Insurance Premium. This is the fee paid by an individual to insure he/she has a marketable title or-in the case of the lender-to insure their lien position. Lender’s Title Insurance costs are determined by the loan amount. Owner’s Title Insurance premiums are dependent on the purchase price and will be discounted if a lender’s policy is simultaneously issued. Estimate your title insurance.
2. Real Estate Commission. This is the fee paid to a real estate company for services rendered in listing, showing, selling, and consummating the transfer of property. This fee is typically associated with the seller.
3. Transfer and Assumption Charges. These are fees charged by a lender to allow a new purchaser to assume an existing loan.
4. Recording Fees. These are charged by a county recorder’s office for recording the documents of a real estate transaction, such as the Warranty Deed and Deed of Trust.
5. Loan Fees. These are fees charged by a lender in connection with the processing of a new loan. These may include origination fees, discount points, credit report, flood certification, underwriting, and processing.
6. Settlement or Escrow Fees. These are charged by a title and/or escrow company for services rendered in preparing documents necessary in the consummation of a real estate transaction. Escrow fees can include settlement fee, title search, document preparation, and courier fees. In East Tennessee, the closing or settlement fee ranges from $110 to $150 paid by both the buyer and seller; title searches will be $150-$300 depending on the county; document preparation $50-$100; courier and wire fees will be charged if the title company has to overnight documents to you or receive/send a wire on your behalf in the transaction.
7. Additional Settlement. Items such as taxes, insurance, impounds, interest prorations, and termite inspection fees.
For an in-depth look at Settlement Costs, you can download the U. S. Department of Housing and Urban Development’s Settlement Cost Booklet.
In October 2015, the Consumer Financial Protection Bureau (CFPB) enacted TRID (Truth in Lending Respa Integrated Disclosure) which made a lot of changes to the customary closing paperwork and process. Learn more about TRID and what it means to you as a consumer.