Most first-time buyers often end up paying higher closing costs due to a lack of basic knowledge and understanding about the factors involved in the calculated cost structure or final price. It is imperative to note that closing costs are easily negotiable. You can easily avoid paying high closing costs if you are aware of the variable involved in final costs.
Whether this is your first time investing in real estate properties or not, hiring services from a = genuine real estate law firm in Charleston, SC, will help negotiate the best prices for your property.
Before understanding the closing cost structure, let us first understand what closing costs are.
What are closing costs?
Expenses that occur over and above the property’s price are called closing costs. Closing costs are the process fees that are paid later or after finalizing the transaction. Closing costs can vary depending on the several variables involved in the transaction, such as home loan percentage, additional expenses, and more. It is best to discuss the cost or prepare a list of costs along with your buyer/seller to avoid misunderstandings at the time of payment.
Factors involved in closing cost
Now let us look at some common factors involved in the cost structure of closing costs.
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Attorney fees
The attorney fee is the expenses charged by the real estate lawyer for preparing the document, reviewing the home purchase agreement, and assisting with other related legal aspects. Many people believe that they can deal with real estate transactions without a lawyer’s assistance. Without a lawyer, you might get involved in intricate legal issues and other related problems.
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Deed transfer tax
It is vital to understand that the deed transfer tax is different from the property tax. This tax is levied for the transfer of the deed to new ownership. You can negotiate with your buyer/seller to decide who will pay the total cost or how will the total be distributed.
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Settlement fees
Similar to deed transfer tax, settlement fees can be paid by the buyer and seller. However, if the agreement specifies that either party has to pay the fees, then that party is obliged to fulfill the same. Review the settlement fees to know the factors involved in this particular transaction.
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Home inspection
The home inspection is the process where a certified inspector inspects the home to check the condition of the home, look for possible code violations, point out necessary maintenance and repairs, and more. If not needed, you can avoid the home inspection and settle the transaction without this factor.
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Title insurance
Title insurance is the coverage that protects the interests of owners from unwanted future claims. This transaction often includes the cost of the title search. The cost of title insurance can vary depending on the value of the property.
Other factors involved in the cost structure of closing costs include loan application fees, appraisal, mortgage payoff penalty, real estate brokerage commissions, pest inspection, property tax, and more.
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