Hey everybody. It's time to talk about closing
costs when buying or selling a house. I'm Tiffany Webber. I'm a real
estate attorney in Mooresville, North Carolina at Thomas and Webber. We love bringing you videos like this
so you learn more about real estate. We'd love it if you would subscribe to
our channel so you'll know when we put out more videos like this one. I'm going to start with buyer closing
costs because it's different for each side, and yes, each party has closing
costs unless there's some
arrangement in a contract where one party agrees to pay the other's
closing costs and that is permitted by the lender. But if you are a buyer, you are going to see your closing costs
itemized on page two of your closing disclosure, and you'll start at the top, you're going to see lender charges like
the origination or application fee, depending on what your
lender calls it. Um, any points meaning if you
bought down your interest rate, that would be reflected
on your closing costs. That also includes things like
your appraisal. If one is required, finding out whether you're in a
flood zone, your tax service fee, which means when they get
all of your tax records, to make sure that you can qualify for
the loan as part of underwriting. Also, there's a charge for
getting your credit reports. You're going to see that
in your closing costs, the lender gets a title insurance
policy to protect their interest in the property. You also get an
owner's title insurance policy, which protects your
interest in the property. So that's part of your
closing costs as well. The next thing you'll see
our register of deeds fees. So anything that has to be
recorded at the register of deeds, the register of deeds has
a fee for. In a purchase, That's going to be your deed and
your deed of trust every single time, if you're getting a loan. But
if you've got anything else, like a free trader agreement
or a power of attorney, there will be additional charges from the
register of deeds that as part of your closing costs. You're also going
to prepay items. For example, your homeowners insurance, you're going
to pay that in full for a year upfront. Most people forget about that, or they
didn't know. So they're kind of like, Oh great. Now I don't have to write that
check or otherwise they're like, Oh no, I didn't realize I was
paying that right now. So that's part of your closing
costs in your prepaid section. You'll also prepay interest depending
on what time of the month you close. It might be close to a whole month.
Um, it's just based on the day, the loan funds until the end of the
month, cause you pay interest in arrears. And then the last thing is kind
of the miscellaneous section. Oh, I take that back. That's not the last
thing you fund your escrow account. So your escrow account, if you're required to have one is the
thing that is established to pay your taxes and insurance on
your behalf, going forward. Think of it kind of like
a forced savings account. So you're not suddenly having to come
up with cash for those big expenses. And then lastly will be
the miscellaneous section. So if you've got any inspections that
you didn't pay for ahead of the closing, you'll pay for those, um, your
survey would fall in that category. If you're paying for
your survey at closing, this is where you'll pay upfront HOA dues
required by your HOA, if you have one, depending on if the tax
bill has already been paid, you may be paying a prorated portion of
the taxes for the year, If you're owed. All right, now what about seller's
closing costs? Yes, you have them. Um, a lot of times sellers
forget about those. So when they see their bottom line, they're wondering why it's lower than
they expected when they did their own back of the napkin math. So seller
closing costs are commissions. If you had agents involved
in the transaction, you're going to see your payoff
for your loan. If you had one, yes, you have to pay off the
loan at the time of closing, and that happens from your proceeds. So you don't get the money and
then go pay off the lender. The lender gets sent a check directly
from the closing. Same thing, if you have any judgments or liens, those will be paid off at the time of
closing to make sure the buyer gets clear title. You'll also be paying if
taxes have not been paid yet, or the Bill's not out yet,
your share of prorated taxes, any prorations for that
matter. So say HOA is due. So you'll pay your part of
the HOA, so will the buyer. Another thing you'll see in your closing
costs are deed stamps or transfer fees or revenue stamps, whatever your local
County calls them. But in North Carolina, those transfer stamps are $2
per every thousand of the sale price. So it looks kind of arbitrary
when you see it on the statement, but there is a method to the madness and
it gets paid to the register of deeds at closing. There are some things that might not
be included in your closing costs, it doesn't happen every single time, but
those things include HOA breakup fees. Or if you'll see them as a line item,
HOA verification, visa transfer fees, we just call them the breakup fee. It's your price to get the heck out
of the HOA and move on to your next property. Also, if you agreed to any repairs and there
have been invoices issued for those repairs, you may pay those invoices out of your
closing costs or any seller paid closing costs if you've given them. So you'll see those don't
apply to every single closing, but if you've made some agreement with
your buyer to provide closing costs or a home warranty or repairs, then those would be paid out
of the closing costs as well. Now those get deducted from your proceeds. You're not bringing a checkbook
to the closing in most instances, unless your closing costs
and payoffs exceed what you got for the price of your home,
which is not that common. Uh, but most often that's just
coming out of your proceeds. You won't bring a check and you'll just
finally get the bottom line either wired to you or given as a
check after the closing. So I hope that explains
closing costs. Of course, that's not an all-inclusive list. It's impossible to account for every
single thing that might be a closing cost, but that is a really good list.
And that will get you pretty dang, close to everything that you'll see on
your closing statement and give you an idea of what you can expect to pay
or not pay at the closing table. Hope that was helpful.
Again, I'm Tiffany Webber, real estate attorney Thomas and Webber.
And we'll see on the next video.
