Residential, Investment, Foreclosure Intervention, Short Sales

Closing Costs Explained


Closing Costs

The bundle of fees associated with the buying or selling of a home are called closing costs. Certain fees are automatically assigned to either the buyer or the seller; other costs are either negotiable or dictated by local custom.

Buyer closing costs
When a buyer applies for a loan, lenders are required to provide them with a good-faith estimate of their closing costs. The fees vary according to several factors, including the type of loan they applied for and the terms of the purchase agreement. Likewise, some of the closing costs, especially those associated with the loan application, are actually paid in advance. Some typical buyer closing costs include:

The down payment
Loan fees (points, application fee, credit report)
Prepaid interest
Inspection fees
Mortgage insurance
Hazard insurance
Title insurance
Documentary stamps on the note

Seller closing costs
If the seller has not yet paid for the house in full, the seller's most important closing cost is satisfying the remaining balance of their loan. Before the date of closing, the escrow officer will contact the seller's lender to verify the amount needed to close out the loan. Then, along with any other fees, the original loan will be paid for at the closing before the seller receives any proceeds from the sale. Other seller closing costs can include:

Broker's commission
Transfer taxes
Documentary Stamps on the Deed
Title insurance
Property taxes (prorated)

Negotiating Closing Costs
In addition to the sales price, buyers and sellers frequently include closing costs in their negotiations. This can be for both major and minor fees. For example, if a buyer is particularly nervous about the condition of the plumbing, the seller may agree to pay for the house inspection.

Likewise, a buyer may want to save on up-front expenditures, and so agree to pay the seller's full asking price in return for the seller paying all the allowable closing costs. There's no right or wrong way to negotiate closing costs; just be sure all the terms are written down on the purchase agreement.

At the closing, certain costs are often prorated (or distributed) between buyer and seller. The most common prorations are for property taxes. This is because property taxes are typically paid at the end of the year for which they were assessed.

Thus, if a house is sold in June, the sellers will have lived in the house for half the year, but the bill for the taxes won't come due until the following year! To make this situation more equitable, the taxes are prorated. In this example, the sellers will credit the buyers for half the taxes at closing.

This Columbus Ohio based real estate brokerage has Columbus Ohio Realtors experienced in short sales and are helping homeowners avoid foreclosure and sheriff sales.  Our certifications include Ohio Foreclosure Intervetion Specialist and Certified Distressed Property Expert.  This real estate web site has many tools to help the central Ohio home buyer and home seller.  You can search the Columbus MLS, search for Ohio HUD homes, search for Columbus Ohio homes for sale that are short sales properties, Columbus Ohio Investment Properties, Columbus Multi-Families and Columbus Ohio Homes for Rent.  Our real estate web site also has a mortgage calculator, real estate special reports, and real estate information on buying and selling Columbus Ohio homes.

In addition, we have years of experience in buying and selling distressed Columbus Ohio investment properties, bank owned homes and Columbus HUD Homes. We understand the rehab process and can help you evaluate the investment property and help you determine if a property has good potential as a long term real estate investment for your real estate portfolio.  We have years of experience in landlording of Columbus Ohio single family homes, Columbus Ohio multi-families, as well as section 8 rentals. 

This Columbus Ohio real estate brokerage also offers Columbus OHio property management for your Central Ohio homes.  Whether they are investment properties, a home you cannot sell and want to rent or lease option or land contract, or you are an out of state owner, we can manage your property for you. We have the resources to professionally manage your home, with your bottom line in mind.  We do extensive internet marketing of your investment property, syndicating your listing to hundreds of web sites.  We provide professional property management reports so you know how your investment is performing.  Our property management fees are reasonable and there are no hidden costs.

We are members of Columbus Ohio real estate investment groups and commerical real estate association where we can promote your investment

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