Understanding Paid Outside Closing Fees

Paid outside closing fees can be a confusing topic, especially for first-time homebuyers. These fees are typically charged by the title company or escrow agent to cover the costs of processing and recording the sale.

They can vary widely depending on the location and type of property, but in California, for example, the average paid outside closing fee is around $1,500. This fee can be negotiated with the seller, but it's not always a guarantee.

In some cases, the seller may offer to pay all or part of the fee to make the sale more attractive to the buyer. This is often seen in competitive markets where multiple offers are common.

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POC fees, also known as paid outside closing fees, can be a bit confusing, but essentially they're expenses that are paid before the actual closing transaction.

These fees are not part of the standard closing transaction, so they won't be included in the closing costs listed on your HUD-1 Settlement Statement. Some examples of POC fees include appraisal and inspection fees, credit report fees, and mortgage insurance applications.

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The bank may show an appraisal fee listed as "POC" on your HUD-1 Settlement Statement, indicating that it was paid prior to closing. This is because many of the fees listed on your closing statement will have already been paid before you get to the closing table.

Fees like what you pay to the mortgage broker or settlement service provider can be paid after closing and are often included in the interest rate or as a separate settlement charge.

Government involvement plays a significant role in regulating paid outside closing practices.

In some states, government agencies are responsible for overseeing the activities of paid outside closing companies.

The government's primary goal is to ensure that consumers are protected from potential scams and unfair practices.

For example, in California, the Department of Real Estate regulates the activities of paid outside closing companies.

This regulation includes requiring companies to register with the state and adhere to specific guidelines.

The government's involvement can also impact the fees charged by paid outside closing companies.

In some cases, government regulations may limit the amount of fees that can be charged.

As a result, consumers may benefit from lower fees when using a paid outside closing company.

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Reviewing the final closing disclosure in detail is crucial to avoid surprises or confusion about what you owe at closing. This document is a comprehensive breakdown of all the costs and fees associated with your mortgage, and it's essential to review it carefully with your loan officer to identify any discrepancies immediately.

Maintain constant communication with your lender up until closing day to stay informed about any potential changes to the cash to close amount. Check if any changes are anticipated and ask for written confirmation from your lender if they state the cash to close has increased.

Be prepared for minor variations in the cash to close amount, but if it looks substantially higher, ask your attorney or reach out to your lender to ensure proper written notice was provided. This is especially important to prevent any potential violations.

Here are some key steps to take if you suspect a change in the cash to close amount:

Service costs can add up quickly, and it's essential to understand what you're paying for. The Lender's Policy is a mandatory fee that all lenders require.

Some title providers may charge a Settlement/Closing Fee, but in attorney states, this fee is replaced by the Attorney Fee. This can be a bit confusing, so it's crucial to clarify with your provider.

The Survey fee is another cost that may be included in initial quotes, but it's often not required. In fact, some providers will remove this fee once they complete their preliminary title work.

Miscellaneous Fees can vary widely across lenders, as different title providers are used to estimate costs upfront. These fees are often additional to the core fees of Lender's Policy and Settlement/Closing Fee.

Here are some common service costs you might encounter: