Closing costs vary by location

Closing costs, the costs associated with buying or selling a home, can add up. It's wise to get an estimate of how much you're likely to pay in closing costs before you make an offer to buy a home or accept an offer to sell.

Closing costs reduce the amount the seller nets from the sale. Buyers need to know in advance of entering into a home-purchase contract that they have enough cash to cover both the downpayment and closing costs.

Closing costs vary with location. Often who pays what fees -- buyer or seller -- is dictated by local custom. For instance, in Northern California, buyers usually pay the title insurance premium, while sellers usually pay the premium in Southern California.

HOUSE HUNTING TIP: Some real estate agents use 1 percent of the expected selling price to estimate a seller's closing cost. This might be close to accurate in some cases. But, there are so many variables that can affect the closing costs in any given sale transaction that it's preferable to have your real estate agent give you an itemized list of the costs you are likely to pay.

Sellers' closing costs can include such things as the real estate broker's fee; transfer taxes, if there are any; costs associated with any mandated compliance requirements; title insurance, in some places; attorney fees, in some cases; closing or escrow agent fees; inspection fees, unless they were paid directly to the inspectors; a home warranty, if applicable; fees for drawing, notarizing and couriering documents; recording fees; property taxes (if seller has overpaid, the buyer will credit the seller that amount); and homeowner association dues, if there are any.

In addition to the closing costs listed above, the sellers pay off the liens secured against the property and any outstanding interest owed at closing. When you make a mortgage payment, it pays interest owed for the previous month. So, if you were to close on March 1, you would owe the lender interest from Feb. 1 through the date the lender receives the funds, which may not be until a day or so after you close. ...CONTINUED

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