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Closing Costs Explained

Closing costs, you hear about them when dealing with real estate, but do you really know what closing costs are? Who is supposed to pay it? How does it affect you as a seller or a buyer? Kris Krebs of Custom Fit Real Estate Group interviews Scott Lamborn of Equity Title of Nevada about closing costs to help us understand them a little better.

Understanding Closing Costs

What Are Closing Costs?

Closing costs are the fees associated with buying or selling property. Closing costs do not include your down payment, and they are 100% negotiable which is why its important to have a good professional representative, like a Custom Fit Real Estate Agent!

How The Market Affects Who’s Paying

The type of market you’re in will affect the negotiating power and who pays for these closing fees. If it’s a buyer’s market then the sellers may be willing to cover some or all of the buyer’s closing costs, this benefits them because they get to sell their house faster. For a seller’s market, like the current one we’re in, buyers will try to make their offers more appealing by covering some or all of the closing costs for the sellers.

How Are Closing Costs Calculated?

Closing costs can be 3-6% of the property’s sales price. So taking Las Vegas, Nevada’s February’s medium market price of $450,000, the closing costs on a home that costs this much could be anywhere between $13,500 – $27,000.

Should You Save For Closing Costs?

It would be a good idea to save for these closing costs because you can’t estimate how negotiations will go and it is better to be safe than sorry. You would have to save some money on top of your down if you’re a buyer. As a seller, you’re likely to see more in your closing costs on your side of the settlement statement because you’d have to pay for standard costs like title insurance. Meaning the sellers pay for insurance to ensure that the background and history of a property would not affect the buyers moving forward.

The Break Down of Closing Costs.

According to Rocket Mortgage, These are the elements of your closing costs:

  • Application Fee
  • Appraisal Fee
  • Attorney Fee (depending on what state you live in, usually no attorney fee for Las Vegas, NV)
  • Closing Fee paid to the escrow company
  • Courier Fee (transporting mortgage documents)
  • Origination Fee (what the lender charges to set up the loan)
  • Credit Reporting Fee (Cover the cost of pulling credit report)
  • Escrow Funds (your cash that is kept by the lender to use towards property taxes, premiums, homeowners insurance and mortgage insurance, by way of part of your mortgage.)

Make sure you look over your disclosure and look for duplicate fees, or fees that are similar these can be negotiated with your lender.

Custom Fit Real Estate
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