Escrow And Closing Costs
Selling your home is not a simple process. Although it would seem relatively straightforward, home selling can be time consuming, even after you have found an individual who wants to purchase your home. The reason is because of the lengthy negotiation and closing process involved in selling a home. The closing process ensures that all of the contingencies stated in the offer have been met and that the transaction can proceed without future trouble.
Purchase Costs
Consequently, one of the biggest issues for homebuyers is the amount of escrow and closing costs that are involved in purchasing a home. Escrow costs and closing costs are similar concepts that refer to expenses accumulating from services that are required to complete a property transaction. Closing fees refer to services that are required in the closing portion of the home sale. Such closing costs include: title insurance premium; real estate commission; transfer and assumption charges; recording fees; loan fees; tax prorations; insurance; termite inspection fees; and surveying fees. These costs are divided or prorated between the homebuyer and home seller determined by the escrow instructions as well as the instructions from the lender.
Escrow costs refer to fees charged by a title and/or escrow company. Escrow companies usually hold money or documents in trust during the closing stage of the property transaction. This arrangement enables both the homebuyer and home seller to finish the final stages of the home purchase or sale without worrying about exploitation from the other side. Examples of escrow costs are the fees charged in order for required documents to be prepared in order to officially consummate the real estate transaction.
Although many individuals complain about the escrow and closing costs involved in the property transaction, it is a required step that is necessary to protect both sides during what is an expensive business arrangement. Escrow and closing costs can make up a component of 3% to 6% of the total purchasing costs. However, real estate laws now make this stage transparent, as both the homebuyer and home seller are able to see in writing the total number of escrow and closing costs has been charged to them. This arrangement gives the homebuyer and home seller peace of mind during what is usually a stressful closing stage of a housing purchase or sale.
