For many people, buying a home may be the biggest purchase they make in their lifetime. It can be a confusing, overwhelming process. One of the most confusing parts can be sitting down at the closing table signing all of those documents. There are a lot of fees paid at closing that can be confusing as well. Let’s talk about some of those fees and what happens at closing.
Closing is also called “settlement” – both are used and it is the last step of the process in buying a home. It normally takes place in Pennsylvania at a law office or title company. If you have an attorney you already are working with – or have worked with in the past – you may choose to close at his or her office. If not, your agent will help you set up the closing.
Take note – you do NOT have to use the agent’s “preferred” vendor or in-house title company. Please speak up and let your agent know you want to use your own attorney of choice, if you have one. Some agents will try to push you towards the broker’s in-house title company. At Ramus Realty Group we do NOT do that. It is against our office policy and we have no in-house title – we believe it’s a conflict of interest. Choose your company yourself, or ask your agent for help, but do not allow someone to push you towards their own in-house company. We do have a list of attorneys and settlement companies we use regularly with very good results, but the first question we ask is “Do you have a preferred attorney and if so please let us know their name.”
At closing, you’ll probably see the buyer, the seller, the agents, the closing agent (attorney or title officer), and perhaps the lender. Sometimes the lender is absent and the closing agent handles all documents. In Pennsylvania, we may see the seller come in prior to closing to sign off and the buyer come in later. Sometimes everyone is all together at the closing table – it depends on the situation and everyone’s schedule. The buyer and seller execute all documents at this time, to make the sale of the property final.
Closing costs are fees paid at closing. These fees are separate from the price of the home, and are above/beyond the sales price. You can expect to see:
- cost of credit report
- home inspection (these first three items may have been paid prior to closing)
- title insurance
- title endorsements
- lender fees – including points paid at closing and application fees
- prorated taxes
These fees can be thousands of dollars, and they vary with the location of the property and the price of the property. You should have seen an estimate of closing costs prior to coming to the closing table. These closing costs should not be a surprise to you. If there is a loan involved, the lender legally must show you these costs when you apply for the loan, and again right before closing. Even with a cash deal, your agent should have prepared a cost sheet for you early in the transaction.
If you have any questions, please ask them prior to closing. Closing costs can vary significantly between lenders and different loan products. Ask your agent to review these documents with you and if they are out of line of “normal” perhaps he or she can help you find a better lender for your situation. Not all lenders are created equal – some have extremely high fees. Ask questions.