Denha & Associates, PLLC Blog

A Guide To Closing Costs

Lance T. Denha, Esq.

Michigan permits attorneys, lenders, real estate agents and title companies to conduct closings. This article has been prepared to help assist with the breaking down the types of closing costs which are the responsibility of each of buyer and the seller.

A buyer of a home or property usually pays the bulk of the closing costs. Assuming the buyer is isn’t paying all cash, the lender or bank providing the buyer a mortgage with which to pay for the home may typically charge for the following:

  • Processing of the mortgage, including the origination charge, application fee, underwriting fee;
  • Appraisal Report- to assure the lender that the property is worth what the buyer is paying for it;
  • Credit Report Fee-no lender will willingly make a loan without first checking the buyers credit;
  • Tax Monitoring Fee- So that the lender can hire a tax service agency to alert it if the buyer gets behind on paying the property taxes.

In addition, the buyer is likely to also pay for a home inspection, fees to the escrow company (negotiable), a title search, transfer taxes, prorated share of the property taxes for that year, homeowner’s insurance premium and fees for recording the property.

On the seller side, closing costs may typically include:

  • Escrow company fees (if the buyer didn’t agree to pay for these),
  • Any fees associated with paying off the existing mortgage,
  • Repairs to the home that the buyer negotiated for, likely based on the inspection report,
  • Sales commission if the seller hired a real estate agent to list and market the property, and;
  • Home warranty if the seller agreed to buy one for the buyer assurance that the home’s various systems and appliances will remain in good shape.

To avoid any surprise closing costs, real estate buyers and sellers should always retain counsel that can thoroughly advise on the negotiation and interpretation of the purchase contract, mortgage disclosure forms, and closing paperwork.