If you've bought a home before, you know all about closing costs. Are you new to home ownership? Get ready, then. If you're seeking a mortgage to buy a home from Tuscaloosa homes for sale, you'll be paying closing costs. Closing costs, which are costs beyond the down payment, can be for appraisal fees, attorney fees, escrow funds, and much more. As the name implies, you pay them when you are closing the sale. To some homebuyers, they may come as an unpleasant surprise after you've already put out for a down payment and other expenses.

Typically, you will pay these fees to third parties, and they generally range from 2 percent to 7 percent of the home's purchase price. Sellers may take on some of these costs, but typically, it's the buyer who assumes most of the closing costs — 3 to 4 percent of the home's cost is common. You can negotiate with the seller to pay some of your closing costs as part of seller concessions, such as these:

• Property taxes
• Title insurance, which includes a search for any liens on the property that could interfere with property ownership
• Loan origination fees
• Inspection fees
• Recording fees (covers the expense of documenting a home's purchase with local government)
• Appraisal fees for anything from foundation cracks to a leaky roof
• Attorney's fee
• Mortgage points (upfront interest paid to reduce your interest rate)

Bear in mind that since the fees are typically associated with a mortgage, if you pay cash for the home, you'll pay a few closing costs but not nearly as much as you would with a mortgage. Closing costs depend on the type of loan you get and where you live.

Estimating Closing Costs

Your real estate agent can help you determine your closing costs based on your area and the home price. Your lender will create a loan estimate document with an outline of projected closing costs and other details. Generally, you will receive this estimate within three (business) days after applying for the loan. Before you close, the lender will issue a summary of the closing costs in what is called a closing disclosure document.

Although your real estate agent will help you estimate closing costs, you can use a closing costs calculator to figure out what you'll pay. 

Other Possible Buyer Closing Costs

Here are some other possible costs you might have to cover when closing:

• Fee for underwriting and assessing a buyer's creditworthiness
• Credit report fee
• Survey fee, for a single-family home or townhome (not condos)
• Taxes, also known as stamp taxes, on money borrowed for a home loan
• Mortgage insurance if you can't raise a down payment of at least 20 percent of the purchase price

Buyers may also need to come up with an escrow deposit for at least two months of mortgage insurance payments and prepaid property taxes.

Possible Seller Closing Costs

It may seem that sellers get off pretty light compared to buyers when it comes to closing costs, but be assured that sellers also have some hefty fees:

• Closing fee, paid to attorney's office or title insurance company during closing on the home
• Home sale taxes
• Seller's attorney fee
• Fee to transfer title to new owner

Remember that sellers must pay real estate agent's commission, which can be 4 to 7 percent of the home sale price.

Our real estate agents can answer all your questions about closing fees and any other issues pertaining to buying a home. Contact us today.