How Much Do Buyers And Sellers Pay In Closing Costs?

If you are a first time home buyer you might imagine sitting at a round table meeting where at the end of the escrow closing you will be handed the list of expenses required to close the deal. To tell you the truth people prefer to close deals virtually on phone or video conference. Still people do meet around table at closing.

However in today’s fiercely competitive world housing brokerage firms like Dream Equities go out of their way to provide their clients with all the information about home buying. So it is unlikely that a buyer will show up at a closing meeting without doing his homework.

Closing costs are the overhead costs other than the cost of the real estate. Both buyer and seller have to pay overhead costs however buyers have more costs but they pay less than sellers, Confused? It all right at the end of reading this post you won’t be.

Although both buyers and sellers have to pay closing costs, buyers have more line item expenses than sellers. The biggest factor contributing to closing costs is the home loan, since buyers take home loans they have to pay the charges stemming from loan.

The chances are experienced brokerage firms like Dream Equities will know the lender, so they will tell you to get the Good Faith Estimate (GFE) and a Truth-in-Lending statement from your lender. Some buyers even use Truth-in-Lending statement to shop for different lenders which is actually a pretty good idea.

Aside from the costs of getting a loan or buying a home, some expenses, such as property taxes or homeowners association dues, are pro-rated and paid at the time of closing.For example if you buy a house and you close at the end of the property tax period you will have to pay the balance of taxes upfront. Same goes for prepaid interest home loan.

The sellers though have fewer line items, pay the biggest cost of i.e. the real estate commission. Since it is the percentage of sale price it’s the biggest closing cost. The real estate commission is split by buyer’s broker and seller’s broker.

If you are a first time buyer, you should hire a broker like Dream Equities who are not just brokers but real estate experts. They will guide you properly.