Understanding Closing Costs

Who Pays What?

There are a variety of services required to close a real estate transaction and some fees that may apply. "Who pays what" is dictated by the traditions and practices in each area, and varies from state to state (and even county to county). FHA, VA and USDA loans may also have some differing rules and procedures. Here is a general guide to fees and services that may be required. This list will give you an idea of what items are typically included in closing costs (not the specific amounts, as fees can vary). The buyer and seller may negotiate "who pays what", but once the contract is signed, instructions cannot be changed unless mutually agreed upon by all parties in writing. Remember, many items in the real estate contract are negotiable.

Commissions                                                                                                                        
If the property is listed or sold by an agent, there will be commission(s) to calculate. Commissions are usually paid by the seller.
Taxes
The seller is required to pay the property taxes through the last day of ownership.
Homeowner's Insurance
The buyer will purchase a fire and hazard insurance policy. Frequently the lender requires the first year's insurance premium to be paid at closing.
Assessments and Liens
Assessments or liens against individuals and/or the property must be paid in full before the closing. The title company will normally show much of this information in the Preliminary Report and the closing attorney will work with the appropriate parties to clear up any problems so that the property may close.
Title Insurance
This insurance policy covers the new owner's interest and "title" to the new property. In our area, the buyer typically purchases the title insurance policy for the protection of themselves and the lender.

Other fees a buyer most likely will pay:

• Attorney's fees
• Deed recording charges
• Loan fees
• Credit report fees
• Appraisal fees
• Notary fees
• Tax service fees
• Pest inspection
• Home inspection
• Survey, if ordered
• Special courier or delivery fees
• Buyer's portion of negotiated repairs
• Buyer's portion of HOA fees/dues

More Information for Home Buyers:

- An Agent's Role in NC
- Ten Tips for First-Time Home Buyers
- Q & A's for Home-Buyers
- Area School Information
- Calculators