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Comparing Closing Costs Can Save Money


Most buyers focus first on the price of a home and then the loan terms, including both the interest rate and the discount points and assume that closing costs are an inevitable and non-negotiable cost of buying property. Closing costs vary widely from state to state, so investors may want to take that into consideration if they are developing a portfolio of property in an area near two bordering states.

The National Association of Realtors estimates that buyers pay between 2% and 7% in closing costs. A report by says that closing costs are highest in Maryland, Delaware and Vermont, and lowest in Indiana, Wisconsin, Colorado and New Mexico.

Closing costs vary by state and will be lower if you are paying in cash rather than borrowing money to buy property. Shopping around at sites such as, and can allow consumers to compare costs and services and find title insurance and title company services at a lower cost.

Transfer taxes and government recording fees are not negotiable since they are established by law, but buyers should obtain a Good Faith Estimate from their lender as soon as possible so they can get a list of all anticipated fees well before the closing. Beginning January 1, 2010, HUD is requiring all lenders to use a simplified Good Faith Estimate form which makes the settlement fees easier to understand.

At settlement, buyers will need to pay homeowners insurance premiums and homeowner association dues which won’t be negotiable. Other costs include inspections which are often required by the lender.

Buyers may assume that fees such as “document preparation” or “courier fee” or “notary fees” or “attorney fees” or “closing fees” are standard, but each of these fees should be compared with fees imposed by other title companies.

At the very least, consumers should question whether each fee is necessary and whether it can be waived. While these fees may add up to just a few hundred dollars and seem less important when spending hundreds of thousands of dollars, the money saved can go toward your new home or to paying for something like a professional cleaning before you or your tenants move into the home.

Michele Lerner, a real estate expert and freelance writer with 20 years of experience, is the author of “HOMEBUYING: Tough Times, First Time, Any Time”.
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