
That euphoric, “We’re going to be homeowners!” turns into aggravation and worry if you haven’t planned adequately for the fees associated with a real estate closing, the other half of the real estate buying equation.
What are Closing Costs?

- Application fee from the lender
- Appraisal
- Attorney fee
- Closing or Escrow Fee—This is paid to the company conducting your closing, e.g., title company, escrow company or attorney
- Courier Fee—Covers the cost of transporting legal documents to complete your loan transaction as quickly as possible.
- Credit Report
- Escrow Deposit for Property Taxes & Mortgages Insurance—It’s common to ask the buyer to put down two months of property tax and mortgage insurance payments at the time of closing.
- FHA Up-Front Mortgage Insurance Premium (UPMIP)—For FHA loans, you are required to pay the UPMIP of 1.75% of the base loan amount. You do have the option of rolling this into the loan, if you prefer.
That’s just 8 items out of a possible 27 that are standard closing costs!
It’s important to understand that you’re going to need some serious money on hand to pay both the down payment and the closing costs.
The exception to this rule is if you work something out with the seller to help with closing expenses.
As part of buying a home, you want to get a home inspection. Think of this as a type of insurance because it can reveal prospective problems with the house that you wouldn’t otherwise know.
Depending on the size of the residential or commercial property, home examinations can run a few hundred dollars up to a few thousand.
Title insurance is something you should strongly consider when purchasing a home. Lenders require you to buy lender's title insurance to cover their investment but homeowner's title insurance is optional for the buyer. That means you're not covered if anything fraudulent occurs.
Here's how it works.
A title company will research the title of the house to be purchased to ensure that the title is good as far as it is legally recorded.
For example, the title company ensures there aren't any liens on the house, no unpaid taxes, etc. that could “cloud” or cause legal problems for you, the new homeowner.
However, the title search can't protect you from unrecorded or fraudulent claims against the property. If these occur and you're not covered, you could lose your home.
However, for about the cost of your yearly car insurance, the one-time homeowner title insurance fee gives you peace of mind for as long as you own the home.
Remember, there's a lot to know about buying a home. Be prepared for both your down payment and closing costs. Choose an experienced real estate agent to guide you through the process.
When you're ready to close on your new home, turn to the pros at Lilly Title & Settlement Company. This woman-owned company will take care of all aspects of coordinating the sale of your home. You'll love how smooth the whole process will be!