Aug 10 2017 36570 1

Aug 10 2017 36570 1

How Much Are Closing Costs? What Home Buyers and Sellers Can Expect

By Judy Dutton|May 18, 2016

Closing costs are the fees paid to third parties that help facilitate the sale of a home, and they vary widely by location. But as a rule, you can estimate that they typically total 2% to 7% of the home's purchase price.So on a $250,000 home, your closing costs would amount to anywhere from$5,000 to $17,500. Yep that's one heck of a wide range. More on that below.

Both buyers and sellers typicallypitch in onclosing costs, but buyers shoulder the lion's share of the load (3% to 4% of the home's price) compared withsellers (1% to 3%). And while someclosing costs must be paid before the home is officiallysold (e.g., the home inspection fee when the service is rendered),most are paid at the end when youclose on the home and the keys exchange hands.

How much are closing costs for buyers?

Home buyerspay the majorityof closing costssince many of these fees are associated with the mortgage.

 “If you're paying cash for a property, there are still a few closing costs, but they are significantly less,” saysCara Ameer, a Realtor® in Ponte Vedra, FL.Here are some of thefees home buyers should brace themselvesto pay:

A loan origination fee, which lenders charge for processing the paperwork for your loan.

A fee for running yourcredit report.

A fee for theunderwriter, who assesses your credit worthiness.

A fee for theappraisalof thehome you hope to own to make sure its value matchesthe size of the loan you want.

A fee for thehome inspection, which checks the home for potential problems from cracks in the foundation to a leaky roof.

A fee for atitle searchto unearth any liens on the property that could interfere with your ownership of it.

Asurvey fee if it's a single-family home or townhome(but not condos)

Taxes, also called stamp taxes, on the money you've borrowed for your home loan.

How much are closing costs for sellers?

Here are the closing costs that sellers are typically responsible for:

A closing fee, paid to the title company or attorney's office where everyone meets to close on the home.

Taxes on the home sale.

A fee for anattorney, if the home seller hasone.

A feefor transferring the title to the new owner.

While this doesn't seem like much compared withwhat home buyers haveto cough up, keep in mind that sellers typically pay all real estate agents' commissions, which amount to 4% to7% of the home's sales price. So, no one sneaks througha home closing scot-free.

Why closing costs vary

The reason for the huge disparity in closing costs boils down to the fact that differentstates and municipalities have different legal requirements—and fees—for the sale of a home.

“If you live in a jurisdiction with high title insurance premiums and property transfer taxes, they can really add up,” saysDavid Reiss, research director attheCenter for Urban Business Entrepreneurshipat Brooklyn Law School. “New York City, for instance, has something called a mansion tax, which adds a 1%tax to sales that exceed $1million.And then there are the surprise expenses that can crop up likeso-called ‘flip taxes’ that condos charge sellers.”

To estimate your closing costs, plug your numbers into anonline closing costs calculator, or ask your Realtor, lender, or mortgage broker for a more accurate estimate. Then,at least three days before closing, thelender is required by federal law to send buyersaclosing disclosurethat outlinesthose costs once again. (Meanwhile sellers should receive similar documents from their Realtor outlining their own costs.)

Word to the wise: “Before you close, make sure to review these documents to see ifthe numbers lineup to what you were originally quoted,” says Ameer. Errors can and do creep in, and since you're already ponying up so much cash,it pays, literally, to eyeballthose numbersone last time before the big day.

Judy Dutton is a senior editor at realtor.com covering news and advice about home buying, selling, decorating, and everything in between (judy.dutton@move.com).

Follow @judy_dutton


Grace Saliente Headshot
Author:
Phone: 818-648-8558
Dated: August 10th 2017
Views: 41
About Grace: Grace is a licensed real estate agent since 2008. As a full-time Realtor who brings a strategic yet ...

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