When a home seller accepts a buyer's offer, it might be tempting to consider it a finished transaction. After all, the most crucial part is finished. However, there is more to a sale than the final buying or selling price of a home and getting the best mortgage rate possible. Keep reading to know about closing costs and other end-stage expenses involved in transferring homeownership.

What Are Mortgage Closing Costs?

Mortgage transactions typically have closing costs, which are the out-of-pocket money buyers and sellers spend to finalize a home sale. These expenses can range from two to five percent, and the amount the buyer or seller must pay depends on the location and the purchase price.

Sometimes, the lender can "roll in" or incorporate the closing costs into the mortgage balance. This way, the buyer can make payments for the closing costs throughout the loan or another agreed-upon period.

Closing Costs For Sellers

The seller is responsible for the real estate agent's commission. The closing costs that sellers must pay are deducted from the sale profit. If the seller made no money from the house's sale, he must still shoulder the agents' commission.

Closing Costs For Buyers

The buyer must shoulder more of the closing costs. Some of these include the loan origination fees, appraisal and survey fees, title and homeowners insurance, PMI, property tax, escrow fees, attorney's fees, and much more.

The buyer pays the mortgage lender the loan origination fee. This is compensation for processing the loan and may or may not include underwriting fees. Meanwhile, appraisal and survey fees determine the home's fair market value.

Besides processing fees, the buyer must shoulder various types of insurance. First, you have title insurance, which protects lenders and buyers from financial loss should the property title be faulty. Then, there is homeowners insurance, which is a requirement for homebuyers. Finally, there is PMI, or private mortgage insurance, which protects lenders if the borrower defaults on their payments.

Other expenses include paying six months of property tax, escrow fees, and attorney's fees. These vary depending on the location of the purchased home. Escrow fees cover the cost of creating an escrow account, while attorney's fees cover legal services involved in closing the sale. There could also be miscellaneous expenses like credit checks, which the homebuyer might need to supply before the sale closes.

In some instances, buyers can negotiate with sellers to pay off some of these costs. The buyer might offer to pay more for the house, limiting the amount of money the buyer has to shell out on top of the sale price. An experienced real estate agent can help the buyer negotiate with the seller to settle the various additional expenses involved.

Conclusion

Closing costs are additional expenses needed in finalizing a house sale. The buyer can pay these at any time after the seller accepts an offer, but the buyer typically settles these right after the sale while papers are undergoing processing. If you are a homebuyer who needs a little more time to pay for closing costs, you can probably negotiate a more convenient schedule for you and the seller. Consulting a mortgage broker will also help.

Get peace of mind that you're making the best decisions for your home purchase when you consult with Frontline Financial. We are in Salt Lake City, UT, helping veterans find the best mortgage rates today. Contact us for more information!