The True Cost of Your Deal

True Cost of Your Deal

Most people have a general understanding that there are certain “closing costs” associated with any real estate or business transaction.

These costs are in addition to the purchase price of the real estate or business, thereby adding to the buyer’s overall costs of the deal.

What I often find, however, is that many people are not familiar with or have completely overlooked the fees and costs charged by the lender providing the financing.

To avoid sticker shock at the closing table, it is imperative that the buyer (borrower) do two things early in the process:

  1. Carefully review the lender’s term sheet/loan proposal to understand all of the items that will be buyer’s obligation to pay. Typically, appraisal fees, valuation fees, lien/judgment searches, recording fees, consulting fees and bank’s own attorney’s fees are all charged to the borrower.
  2. If the term sheet is not specific enough, the borrower should speak to the lender in order to get a detailed breakdown of all charges.

While the bank will usually only provide an estimate of costs, it should be able to identify the actual line item charges that can be expected.

Lastly, if the actual costs at closing greatly exceed the estimates in the term sheet, it is always worth trying to speak to the lender—sometimes, the lender will agree to reduce your final tab.

Josh Marks and team walking in hallway

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