Closing Costs – What to Expect
Most people will only do a few real estate transactions in their life, but at Arrowhead Title, we handle countless real estate closings each year. As a title company at the Lake of the Ozarks since 1984, we know that when buying real estate for the first time, many people are surprised by the unexpected costs they are responsible for paying in the closing process. So, we wanted to talk about what those costs are and what they are for, to help you prepare for buying a home at the Lake of the Ozarks.
Costs associated with the property.
In the process of making sure you are buying what you think you are buying, there are several things that have to be done, and each one comes with its own cost. There will be an appraisal fee as well as a charge for the home inspection(s). There will also be a cost for the title search and the title insurance policy.
Costs associated with the mortgage.
These are costs associated with proving to your lender that you have the ability to pay off the debt. The bank will want a credit report and may also have specific bank related fees such as an origination fee, an application fee, and an underwriting fee. You will want to be prepared for legal fees and applicable local fees.
Costs for prepayment.
Your lender will also want to ensure their investment is protected with homeowner’s insurance and that there will be no risk of tax delinquencies. That is why a lender will typically require prepayment of a homeowners insurance policy and property taxes.
Who pays for what.
When you add all the potential costs you could incur during the closing process, the total is usually around 2-5% of the loan amount. For the most part, all those costs will be considered the responsibility of the buyer. However, it is not unheard of for a motivated seller to negotiate to pay some of those costs, or to raise the price of the home and loan to accommodate for those costs. Your real estate professional can help you negotiate your options in the transaction if you ask them to.
When and how.
Although it can vary between loans, closing costs are typically paid up front rather than paid over time with your mortgage. So, it is important to have 2-5% of the cost of the home in reserve for your closing date. Most of the time you will want to have that in the form of a cashier’s check.
As a trusted title agency at the Lake of the Ozarks, we are very familiar with every aspect of the real estate closing process. We have the experience and the resources to make the process as smooth and easy as possible. When you are ready to buy a lake home, remember that you get to choose your title company if you are paying for it. Choose a title company that cares as much about your transaction as you do, and who knows how much accuracy really does matter.