Most buyers looking to purchase a home or commercial property often overlook the “other costs”, and only consider the down payment and monthly installments.
First-time or inexperienced property sellers don’t think beyond the high agent fees or commission, since it’s the biggest expense that shows up on the balance statement. However, there’s a list of other costs both parties need to take into account. These consequential costs are referred to as ‘Closing Costs’ in real estate terms.
In most real estate markets around the country, these costs usually account for about 1% of the transaction.
However, this rule does not include the lender fees the buyer has to pay, which generally adds up to another 1% or higher, depending on the property’s sale price.
Regardless of your city or state, you should be aware of these closing costs so you can include them in the decision-making process. Sometimes, a few thousand dollars could be the difference between cash in and cash out.
An overview of the closing costs following a property sale
Most buyers and sellers think of these closing costs as the title insurance fee or part of the escrow fee (depending on the state).
However, these costs are much smaller, and yet, they can easily sum up to result in thousands of dollars on your settlement statement.
Let us walk you through some of the fees lenders or escrow agents usually leave out of the conversation when finalizing the mortgage or loan documents:
Hoa processing fee
HOA fees cover the maintenance cost of common property areas and/or utilities, such as sewage and garbage disposal, swimming pools, posts, and landscaping. Depending on the neighborhood and state, this fee can easily range between $50-$250.
Hence, make sure you ask what HOA fees are included in the monthly mortgage payment and what costs will still have to be paid by the buyer. And what if these monthly payments don’t cover all HOA fees?
The property seller will need to pay any remaining amounts out of pocket.
Outside fees & charges
Any outside charges or associated fees that are not covered by your lender can also be added to your closing statement under ‘sales contract fee’ or ‘processing fee’. These include:
- Home inspection report from a licensed official (cost usually varies depending on size)
- Private settlement fees (required sometimes for demanding consumers)
- Transfer tax service charge for some states where there’s no transfer tax
Recording fees for any changes to the mortgage title (on average $60-$80 per change)
Additionally, there’s a possibility that your property tax payment will be due by closing. And what if you live in a county with multiple public sector agencies? The charges for recording documents can vary depending on what states or counties you make the purchase. So make sure it is clear what fee covers what service and who pays what.
Realtor commission & closing fee
When buying a property from another buyer, most of the time the real estate agents are involved as well. Although this may not be obvious, they play an essential role in facilitating communication between both parties involved in the transaction to ensure all parties are on the same page and ready to sign off on what is a binding contract.
These agents are what you pay for if you make a purchase from the Real Estate Company, i.e., realtor fees or commissions. Sometimes, it’s just 2% of the final settlement price, but that can quickly add up to thousands of dollars in most cities where property costs are higher than average.
For example, if both parties decide not to use an agent (not recommended), then the buyer will have to pay about $9,000-$10,000 ‘at closing’ for their services. Of course, this figure doesn’t include what they receive as compensation for finding your home or helping with other related procedures such as title or loan settlement.
Yes, on your settlement document, you’re likely to find an email fee up to $50 lenders charge for forwarding your documents. This fee comes as a result of the countless amount of steps involved in clearing your paperwork for final approval, and emailing them to each party can be done quickly.
Although, what you might not know is that electronic signatures are valid under federal law! Nonetheless, what’s convenient for both parties may have an associated price tag.
Tax relief fee/partner exchange fee/non-settlement fee
This fee is what the lender or escrow agent charges when they consider your purchase offer non-settlement because you failed to meet the seller’s asking price or some other financial obligations. The good news is that this charge is rare and usually occurs only in extreme cases such as bankruptcy (this really doesn’t happen).
The other fee to watch out for is what some people call the ‘partner exchange fee’. Technically, it goes by many names and the purpose of this charge varies depending on what state you live in.
In most cases, though, this fee is meant to discourage buyers from submitting a purchase offer without intending to follow through with it. Nevertheless, when making an offer on a property that has been listed previously (i.e., a seller who has lost their home in foreclosure), what they are trying to do is avoid multiple offers that end up driving up the sale price too much or scaring off potential buyers completely.
This is why your offer will be subject to lender/title company evaluation before being considered. This usually costs around $500-$800 and what you’re paying for is a thorough examination of what your property offer entails so they can verify that all the financial details are in order before anything else.
If you decide to back out from what you have offered, then expect additional fees because this will require them to start over again when dealing with another buyer which requires additional time and effort on their end.
Fees for closing on a weekend
But what if you want to close on a holiday weekend and it happens every year? It may seem confusing at first but what these lenders are trying to do is keep their settlement agents working as much as possible! In turn, what settles your deal happens sooner and what your realtor receives for their professional services is spread over more days.
This is what lenders call a ‘seasonal fee’! More importantly, what you should know about these fees are what they cover. In most cases, it’s the preparation of documents (i.e., reviewing them before presenting them to settlement agents) plus additional hiring costs with regard to new staff brought in and overtime pay for existing workers made necessary by what would be an otherwise quiet weekend or holiday week.
An added bonus if you decide to close on a Saturday is what you save on interest charges when it comes to the funds received from sellers who need comprehensive loan approval within 24 hours as opposed to 36-48 hours after what would have been normal business hours.
This is the fee charged by mobile lawyers or notary workers lenders hire to take the documents to the buyers for signing. These professionals arrange all the property transfers and payments related to the real estate transaction, and can easily charge anywhere between $200-$1,000. This is what the lender will charge you for regardless of what state you live in because regardless of where your property is located some fees are regulated by what federal and state law decrees.
Even if what you’re looking at isn’t close to any of the states bordering your location, what they are trying to do is cover any additional charges brought on by what would otherwise be an out-of-state transaction (should it have been a sale with someone living elsewhere).
Most lenders will try to avoid this type of fee whenever possible so expect some negotiations! Some buyers choose not to pay these fees while others are more than willing to meet them halfway when it comes time for closing day.
What many people don’t realize is what their realtor’s commission is what you should be negotiating with their representative. Of course, what your realtor wants is what the seller gets so don’t get upset if they seem to have sided with what the seller wants as far as closing cost amounts go.
This is the fee for all the office supplies used to create and assemble your documents, including paper, ink, binding, and transport, etc. This is what the lender will charge you for regardless of what state you live in because even if what your realtor needs to complete what they need to do is what’s provided by an office located somewhere else (i.e., out of state), this fee covers what shipping and handling costs are involved so that the materials arrive quickly and without any trouble.
This is what lenders can negotiate but most won’t reduce it below $150-$300 as these fees have been escalated over time due to what extra time, effort, and skills is required when completing any document-related transactions today! Of course, what you can do if trying to avoid what some buyers call an ‘unneeded expense’ is select a loan company that’s willing to forgo what these fees cover.
You can get what you’re looking for with what a professional fiduciary does, as they know the various ways lenders will try to hide their commissions and only want what’s best when it comes time to close on your real estate sale or purchase.
With what they know, what you need is actually what ends up being yours at what costs that are within your range of affordability! Even if negotiating options in regards to those fees won’t help much as far as lower amounts go, don’t hesitate to ask about any other cost-saving tactics available (i.e., faxing instead of overnighting).
This is perhaps the only fee many home buyers and sellers are aware of as it regularly comes up during real estate transactions. An escrow agent typically handles all the funds during the settlement along with the overall accounting. They ensure that both parties pay the dues and follow the deed of agreement.
This is what you can negotiate because what your real estate lawyer will charge depends on what state what property you’re purchasing or selling is located.
Where I live, the going rate for what one of these agents charges to handle everything for what requires their service is between $500-$1,000! Most people don’t know what they are doing when it comes time to close on what property you have just purchased so what they end up with are large fees that could be negotiated down and money put aside until closing day.
All said and done, what this fee covers is what work an escrow specialist does almost exclusively which includes handling all the inevitable paperwork you need to complete a sale or purchase.
Understanding loan tie-in fee
The Loan Tie-In Fee refers to the amount charged by an escrow agent or company for all additional work related to the settlement and processing different lenders into the agreement. In many cases, homeowners have to secure loans from multiple sources to finance their homes. The agents will collaborate with all the lenders during the transaction and share the loan documents as per Federal Regulations.
Here’s an overview of the Loan Tie-In Process:
- The Escrow agent prepares the new loan estimate (LE) disclosure while following the lenders’ guidelines.
- The agent then submits the certified copies to the title company and submits a report to all parties. If any issues arise, they identify the errors and rectify them.
- Next, forward the updated documents to the buyer for their signature by arranging a mobile notary or lawyer.
- Following the signatures, the agents compile the executed loan documents and address the title company to complete the title insurance requirements.
- Finally, they follow up on the processes and verify the documents until all parties are satisfied.
Paying the loan tie-in fee and what you should know about it
You may not have to pay what’s tied up in fees as what’s included in what amount is what varies depending on what state what property is located. Also, if funds are transferred by wire, there are no additional charges.
The way this fee works is that when getting a loan for what property you want to buy or sell, the lender will require you to go with what they provide after collecting all your documents. They will then transfer them to the title company so that they can secure what papers are required at closing time.
They collect an estimated closing cost that will include everything including what fees (e.g., escrow and what other services).
What’s followed then is what you sign what’s known as what Loan Estimate Disclosure (LE) that tells what your estimated fees are going to be. Once the lender receives their share of what property sells, they pay what doesn’t matter how much it may be and close on what property. This is when what loan tie-in fee becomes a part of every settlement cost so everything can get paid for with the balance of funds!
The bottom line is that whether there were any changes or not, once lenders agree on all terms then escrow agents simply act as intermediaries between them and the title company since anything by law must go through them prior to closing on what property you want to buy or sell!
In what case what lender doesn’t use what title company, the bank commits what amount of funds after what sale is completed. The title company then follows everything up and notifies what agent about changes in what order what settlement will proceed.
This means that you have to pay for everything whether there are any issues with your loan documents or not as what title insurance policy must wait until the lenders sign off on all terms and conditions.
The other issue you can face when having your own loan approval is that, if there are any errors related to what paperwork, they may get caught and postponed at a later stage in what process which is inconvenient especially if you are trying to close on time! Holding up the closing process can be what worst-case scenario in what process and even what borrower may get what money back after what lengthy process is finished!
Decreasing loan tie in fees
While it is important to know what you have to pay for, there are some steps that can help reduce your closing costs. They include refinancing your loan with what lender even if you have already purchased a new property or refinanced one of your existing loans.
You might also check with the seller as well about any prepayment penalties as they may allow you to make early payments on their behalf which means from this moment on, you won’t owe them any more principal when the time comes.
Other alternatives to consider include what following services and comparing them with what you were offered. This way, you may be able to find better alternatives which are often not what first comes on what table!
This is what reason why what’s best for each one of us differs as what amount we have leftover will determine how much of what fees we can avoid spending in the end. It all depends on what lender and title company takes part in your transaction!
Now that you are aware of all the closing costs involved during a real estate transaction, you can negotiate the fees by approaching different escrow agents in your area. This way, you can limit the Loan Tie-In fee to a minimum, and even stop it from reaching four figures. Hopefully, this post must have given you an idea of how the escrow and Loan Tie-In process works. However, we recommend speaking to an experienced agent to offer more detailed information.