How Do Closing Costs Work in DC

• October 28th

by UrbanTurf Staff

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Today, UrbanTurf takes a closer look at closing costs. 

Closing costs are fees associated with the purchase of a home that are due at the closing of the sales transaction. These costs can vary greatly depending on the home's location, value, and the type of loan being used to finance the purchase.

In DC, closing costs typically range from 2.5%-4% of the total purchase price of the home. The exact amount will depend on several factors, including the purchase price, the type of loan being used, and the services included in the closing process.

There are several types of closing costs that are common when buying a home including:

1. Loan origination fee -- This fee is charged by the lender for processing the loan application and is usually a percentage of the loan amount.

2. Appraisal fee -- This fee is charged for having an appraiser assess the value of the home.

3. Title search and title insurance fees -- This fee is for searching the property's title to ensure there are no liens or other encumbrances on the property, and for obtaining title insurance to protect the buyer in the event of any title issues.

4. Recordation fee -- This fee covers the cost of recording the transfer of the property's title to the new owner.

5. Survey fee -- This fee is for having a surveyor create a detailed map of the property, including any structures on the land.

6. Homeowner's insurance premium -- This is the annual premium for insurance that protects the home against damage and theft.

7. Property taxes -- This is a prorated amount of property taxes due at closing, based on the number of days left in the tax year.

Closing costs are not negotiable, but in a home buying transaction, a seller may give a credit to the buyer for closing costs at the settlement table, so that the buyer can wrap their closing costs into their mortgage.

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/how_do_closing_costs_work_in_dc/20585.