Closing Costs Explained - YouTube

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.

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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.