Title Settlement Closing Fee
Whenever you refinance or purchase a home, you need to pay several fees at the end of the sale, often called “closing fees” or “title fees.”
Professionals use the word “title” since it is a legal document that denotes ownership. If you pay title fees, you are paying costs associated with transferring the ownership of a property from somebody else to you. These costs can include multiple services that modify, review or insure the title of a home.
There are many title fees that you might pay, such as home inspections, which is usually required by insurance companies so they can gauge on how to charge to protect your home. Home inspections are a common fee typically prior to your cancellation period in your purchase contract. This service checks for damage to your home. They will also inspect structural components, your electrical system, roof, HVAC, foundation and plumbing. Many buyers attend the home inspection to ensure that the new property they intend to buy meets their inspection.
However, in this article, we focus explicitly on title settlement closing fees.
What Is A Title Settlement Closing Fee?
Title settlement closing fees, sometimes called “closing” or “settlement” charges refer to costs associated with finishing a property transaction. These fees cover several individual items including:
- Deed preparation
- Search abstract
Many title settlement companies bundle these fees together into a closing fee package. However, some will also itemize invoices so that you can see how much you are paying for each.
Settlement costs, however, depend very much on the services that you require to close a deal on a property transaction. Many fees are variables depending on your loan, get a mortgage quote and talk this over with us
The Components Of A Title Settlement Closing Fee
Lenders’ mortgage charges generally fall into two categories. The first are origination charges. These are fees that lenders charge to provide you with a loan, this should cover overhead and payout. These cover the originator’s commission on the deal and the cost of sourcing it. How much you pay depends on your credit score.
The other set of charges are discount points. You typically pay these fees in exchange for a lower interest rate, it should lower your monthly payment. The more you buy down, the lower the interest rate becomes generally. There are exceptions to where a higher interest rate actually costs more than a lower one, it does not make sense, however you want to make sure that every rate is checked out to make sure there are no irregularities as every ⅛ of a point (0.125%) can be different. This is why it is important to get a mortgage quote first.
Title Settlement Closing Fee And Other Costs
Additional costs may also apply whenever you take out a loan. Many of the title costs vary from company to company, allowing you to shop around to get a good deal on title as some are owned by attorneys, while others are not. Usually, you will pay a fee for title services, sometimes there are costs the seller will pay as well. A title is a document that says who owns the house. Title companies need to write it in a certain way to ensure that the transaction is valid. This process reduces the likelihood that questions will arise in the future concerning who owns the property. Additional costs may also apply whenever you take out a loan.
You may also have to pay for the lender's title insurance. This covers the lender if somebody later finds the title to be invalid. There may be transfer fees associated with the loan as well.
Related to this, you may also require a survey. This checks your property’s boundaries called metes and bounds to ensure that they are valid. Border disputes can be costly to resolve in the future, so surveys are a preemptive tool that buyers sometimes use.
Administrative Settlement Fees
Before finalizing a home sale, lenders and other agents must perform a range of administrative tasks. These imply additional fees.
Financial institutions, for instance, have to ensure that they have collateral for making any loan. This usually involves an appraisal fee to confirm the value of your property.
Banks and brokers will also need to check your credit history to determine if they should provide you a loan. Credit histories provide information on the borrower’s capacity to repay debt. Credit check might be another cost.
Lenders may also require flood certification if your house is built on a floodplain. They can obtain these from the Federal Emergency Management Agency. Risk of flooding may reduce the value of a property.
Some fees the title agency might charge you directly on line C of your Loan Estimate/Closing Disclosure are but not limited to:
- Abstract/Title search
- Lenders title agent
- Lenders title fee
- Settlement/Closing fee
- Make sure to review your full Closing Disclosure.
- Generally the following applies:
- Section A. Origination Charges
- Section B. Services You Cannot Shop For
- Section C. Services You Can Shop For
- Section D. Equals the total of A+B+C
- Section E. Taxes and Other Government Fees
- Section F. Prepaids
- Section G. Initial Escrow Payment at Closing
- Section H. Other
- Section I. Total Other Costs of E+F+G+H
- Section J. Total Closing Costs of D+I
How To Find Your Title Settlement Closing Fee
You can find title settlement closing fees on your loan estimate and closing disclosure. This legally required document lists all the costs, risks and features associated with your mortgage. Lenders are obliged to provide you with a loan estimate within three days of making your application. Learning more about title settlement closing fees lets you plan for the transaction better.