Between the signing of the purchase agreement and the closing date on real estate, there is much to do. When it comes time for closing, it's vital that you understand what is expected of you when it comes to buying a home in terms of cash. Read on and find out more.
Cash for Closing: What to Expect
Some of the below costs are one-time only costs. Some of them, however, will need to be paid on a continuing basis as long as you own the home.
Fees to Expect
- Title Fees and Insurance: This category pays for the work the title company performed when researching the title of the home you are about to buy. The law requires that the home be free of encumbrances before the sale can go through. That means no other (unknown) owners can step forward and claim they own the home. Buyers also purchase title insurance that goes to help fight against anyone who does try to claim ownership of the home in the future. In many cases, the closing may be held at a title company, and you may be charged a fee for that service as well.
- Financing Fees: When you shopped for and applied for a mortgage, you may have become familiar with points. Points are the fees attached to the loan, and those fees are commonly paid upfront at the closing. You may also pay prepaid interest on the loan.
- Taxes: In most cases, homeowners pay their property taxes once a year. When you close on a home, however, you must pay the taxes for the remainder of that calendar year (in many states). After that, the money may be paid once monthly when you pay your mortgage and held in an escrow account. Your lender is then responsible for paying your property taxes when they come due. There may also be state and local taxes due on the sale of the home.
- Deed Fees: This fee is usually paid to your county deed office for the official recording of the deed.
- Other Fees: Copying, wire transfer, courier, and notary fees.
- Maintenance Plans: Some homeowners purchase a form of insurance that covers repairs on the home. The way you pay varies, but many times the fee is folded into the home purchase.
- Homeowners' Insurance: Lenders require the home to be covered, and you may pay your first premium at the closing.
To find out more about the amount you will need at closing, speak to your real estate agent.