What are Third-Party Costs?
There may be expenses paid to others like inspectors or insurance firms, even if you paid cash for the property:
Attorney Fees – You may want to hire an attorney when purchasing a home. They usually charge a percentage of the selling price up to 1%, or some work on an hourly basis or for a flat fee.
Title Search Costs – Usually your attorney will perform or will arrange for the title search to ensure there are no obstacles such as liens or lawsuits regarding the property. Or you may work with a title company to verify a clear property title.
Lender's Title Insurance – Even with a title search for any property obstacles, liens or lawsuits, lenders require insurance to protect their mortgage investment. This is a 1-time insurance premium usually paid at closing, and is for the lender only, not the homebuyer.
Homeowner's Insurance – Most lenders require you prepay the first year's premium for homeowners insurance, sometimes called hazard insurance, and must show proof of payment at the closing. This ensures that the investment will be secured even if the property is destroyed.
Flood Insurance - If your home is in a flood zone, you will be required to purchase flood insurance. Again, most lenders require you prepay the first year's premium for flood insurance, and you must show proof of payment at the closing.
Real Estate Agent's Sales Commission – The seller pays the real estate agent's commission, and if one agent lists the property and another sells it, the commission is usually split. The commission is negotiable between the seller and the agent.
Home Owners Association Fees - some home owners associations charge a fee to transfer ownership from the seller to buyer. They also might charge a fee to complete an HOA Questionnaire required by the lender.
Subordination Fee- On a refinance, if you have a second mortgage or HELOC on the house, and you are not paying that off in the refinance, it will have to be re-subordinated to the new first mortgage. Most lenders change a fee to do this.
Survey - Many title companies require a survey in order to issue title isurance. A survey will uncover any errors in propery lines, as well as problems with any easements on the home.