If you’re saving for a home, it’s important to remember that the down payment is just one of the expenses associated with finalizing the real estate transaction. You have probably heard the term “closing costs,” for example, but you may not know what they include. Such costs might be comprised of appraisal fees, title search expenses, loan origination fees, credit report charges, and deed-recorded fees. They also include escrow fees, which can be fairly complicated and often confuse both buyers and sellers. To clear things up, here are some answers to the most common questions about these fees.
Common Questions About Escrow Fees, Answered
What are they?
Escrow fees cover the cost of the attorney or escrow agent who accepts, holds, or transfers funds during a real estate transaction. Typically, the seller is responsible for these fees, but it varies from sale to sale.
How much are escrow fees?
In general, an escrow agent will charge between 1% and 2% of the purchase price for their services. They may also charge the seller and/or buyer for transferring funds and distributing documents.
Does the buyer ever have to cover escrow fees?
The buyer and seller can negotiate when it comes to all costs associated with closing the sale, including escrow fees. In some cases, they split such expenses evenly, and in others, the buyer may actually cover all of the fees.
Will some portion of the fees be refunded upon closing?
An escrow agent will provide a rough estimate of their fees prior to closing and then add a “refundable pad” to the final amount. Since the total can change depending on interest rates and other variables, this will ensure there is enough to cover the escrow services. After the transaction is finalized, the agent will then refund any unused portion of the pad.
If you have additional questions about escrow fees — or protecting your financial interests in general during real estate transactions — turn to the knowledgeable team at Chattanooga Title. For more than three decades, this title agency has been helping residents throughout southeastern Tennessee with every step of the home buying or selling process. Whether you need escrow services, title insurance, or assistance with a foreclosure, you can count on their team for expert guidance. To schedule an appointment, call (423) 756-3057, or visit them online to learn more about their services.