Closing Costs in VT

The following is a list of the various closing costs a buyer may encounter in a real estate transaction. It is likely some, but not all of the costs will apply to your closing. Although the list is not exhaustive, it includes the most common loan and closing costs.

1. Loan Origination Fee: This fee is typically based upon a percentage of the loan amount.



2. Loan Discount Fee: This fee is typically based upon a percentage of the loan amount.



3. Appraisal Fee: This fee covers your lender’s expense in having the property appraised to determine its fair market value. You should request a copy of the appraisal if one is not provided to you at closing by the lender.



4. Credit Report Fee: This fee covers your lender’s expense in purchasing a credit report about you.



5. Flood Service Fee: This fee is paid to a company that determines whether the property is located in a Flood Zone as determined by the Federal Government. If the property is in a flood zone, the lender will require flood insurance. This service usually monitors your property for the life of the loan.



6. Interim Interest: This is the interest due on your new loan during the month of your closing. This amount varies depending upon your interest rate, loan amount, and which day of the month you close. As a general rule, the later in the month your closing occurs, the lower your interim interest.



7. Hazard Insurance: You should have a policy of Hazard Insurance in place by the date of closing to protect you against loss. The policy should name your Lender as an additional insured in the mortgagee/loss payee clause. This policy is often referred to as a Homeowner's policy. With a condominium, a certificate of insurance is obtained from the condominium association. This coverage insures the structure. Most condominium owners also obtain a condominium owners policy to insure their contents and provide liability coverage.



8. Private Mortgage Insurance ("PMI"): This is a type of insurance written by an independent mortgage insurance company that protects the lender against loss incurred due to mortgage default. PMI enables lenders to lend a higher percentage of the property’s appraised fair market value. The PMI requirement may be eliminated if the value of the property increases due to appreciation or improvements made, or if the amount of the loan has been paid down to a certain level. Any borrower subject to PMI requirements should check with the lender regarding the specific rules and requirements applicable to their unique circumstances.



9. Escrows: You and/or your lender may opt to have some or all of the following payments escrowed: real estate taxes; private mortgage insurance payments (if applicable); and, hazard insurance premiums. If any of these items are escrowed, they are collected with your mortgage payment. When your taxes or insurance payments are due, the lender remits the payment.



10. Attorney’s Fees: If the buyer or seller had legal representation involved in the transaction, the attorney’s fees are customarily paid at time of closing.



11. Title Search: When your offer has been accepted or your refinance loan has been approved, you must have a title search performed. American Land Title, Inc. will perform this service for you.



12. Settlement/Closing Fees: Once your closing date has been set, a settlement agent will perform the following: obtain payoff statements for outstanding mortgages, liens or attachments, as necessary; prepare a HUD-1 Settlement Statement; calculate customary prorations; conduct the closing (oversee the proper execution of all necessary documents and make copies for the various parties); disburse funds as necessary; and, send documents to the applicable city or town clerk for recording. American Land Title, Inc. can perform this service.



13. Title Insurance: Lenders require a title insurance policy to protect their interest in your property. Owners may also obtain a policy known as an Owner’s Policy to protect their interests. Premiums are based upon the purchase price or loan amount using rates filed with and approved by the Vermont Department of Banking, Insurance, Securities and Health Care. American Land Title, Inc. will obtain this insurance for you.



14. Vermont Property Transfer Tax: A town or city clerk will not record a deed for the transfer of title to real property unless it is accompanied by a Vermont Property Transfer Tax Return and payment of any applicable transfer tax. The tax is paid by the buyer to the Vermont Department of Taxes. If the property will be the purchaser’s primary residence, the tax is .5% (one-half of one percent) of the first $100,000.00 of the purchase price and 1.25% (one and a quarter percent) of the purchase price in excess of $100,000.00. If the property will not be the primary residence of the buyer, the rate is 1.25% (one and a quarter percent) of the entire purchase price.



15. Recording Fees: The cost for recording documents at the applicable municipality is $7.00 per page and $7.00 per Property Transfer Tax Return. Generally, the buyer pays the fee for recording the Deed from the seller, the Vermont Property Transfer Tax Return, and the mortgage deed. The seller pays for recording documents required to clear title, such as a mortgage discharge.



16. Property Taxes: In Vermont, property taxes are assessed and collected by the municipality in which the property is located. The tax is based upon a rate established annually by the municipality and applied to the municipality’s assessed value for the property. Property taxes are not uniform throughout Vermont, and vary from year to year and from municipality to municipality (e.g., some municipalities in Vermont collect taxes based upon a July 1 – June 30 Fiscal Year, some operate on a January 1 – December 31 Fiscal Year, and others operate on a April 1 – March 31 Fiscal Year). Generally, the property taxes will be prorated between the buyer and the seller as of the date the buyer assumes possession of the property, which is usually the date of closing. If the seller has paid taxes in advance, the buyer will be expected to reimburse the seller for the portion the seller paid in advance. If the seller owes money as of the date of closing, the seller will be expected to contribute his/her share of the property taxes at closing.



17. Assessments: If your property is served by a municipal water or sewer system, or is subject to any other special assessments, those fees would likely be prorated as of the date the buyer takes possession of the property (usually the date of closing).



18. Condominium Association Dues: If the property is a condominium, the monthly dues will usually be prorated as of the date the buyer takes possession of the property (usually the date of closing).



19. Fuel Prorations: Generally, the purchaser of real property in Vermont pays the seller for the value (at current market rates) of the fuel left in the tanks at the property as of the date the buyer takes possession of the property (usually the date of closing).