FSBO Closing Costs
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FSBO Closing Costs Simplified
Understanding Closing Costs
When you sell your home "For Sale by Owner" (FSBO), your lender typically provides a "Good Faith Estimate" of closing costs within three business days of your loan application. Remember, this estimate may not include every possible cost, and actual expenses might exceed it. To avoid surprises, prepare to pay more than the estimate suggests.
Comparing Lenders
When comparing lenders, focus only on the costs they charge. Other fees are often educated guesses and may vary.
Categories of Closing Costs
Closing costs fall into two categories:
1. Non-recurring costs: One-time fees like loan origination, recording, and survey fees.
2. Recurring costs: Ongoing expenses such as property taxes and homeowner's insurance.
Common Closing Costs
1. Attorney or Escrow Fees: Both yours and the lender's, if applicable.
2. Property Taxes: Covering the tax period up to date.
3. Interest: From closing day to 30 days before your first payment.
4. Loan Origination Fee: Covers the lender's administrative costs.
5. Recording Fees: For documenting the sale.
6. Survey Fee: Cost of property survey.
7. Mortgage Insurance Premium: First payment, if applicable.
8. Title Insurance: Protects you and your lender.
9. Loan Discount Points: Prepaid interest to lower your rate.
10. Escrow Account Payment: For future taxes and insurance.
11. Homeowner's Insurance: Paid receipt for current coverage.
12. Documentation Preparation Fees: For legal paperwork.
On Closing Day
- Present proof of homeowner’s insurance.
- Review the settlement statement detailing what you and the seller owe each other.
- Understand and sign mortgage documents, legally committing to repay the loan.
- The deed and mortgage get recorded, completing your home purchase.
Key Documents You’ll Receive
1. Settlement Statement: Itemizes fees and services.
2. HUD-1 Form: Breakdown of services and fees.
3. Truth-in-Lending Statement: Loan terms and costs.
4. Mortgage Note: Promise to repay.
5. Mortgage/Deed of Trust.
6. Binding Sales Contract: Should be reviewed by your attorney.
7. Keys to Your New Home.
Understanding Settlement Costs
1. Sales Commission: Typically a percentage of the home’s selling price.
2. Loan-Related Costs: Include origination and discount fees.
3. Appraisal and Credit Report Fees: For property value assessment and credit evaluation.
4. Insurance Costs: Including hazard, mortgage, and potentially flood insurance.
5. Title and Recording Charges: Ensure legal transfer and documentation.
6. Additional Fees: Such as inspections for pests or lead-based paint and survey costs.
Final Thoughts
Your closing agent will explain all fees in detail, helping you make informed decisions. Be prepared and ask questions to ensure a smooth closing process.
You can find the original non-AI version of this article here: FSBO Closing Costs.
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