FAQ #1 for Buyers in Cedar Rapids: What are Closing Costs and Who Pays Them?

Real Estate Agent with Cedar Rapids/Iowa City, IA KW Legacy Group S44645

This is the most frequently asked question that I get from buyers, especially first time home buyers in Cedar Rapids and Iowa City.

Closing costs are addressed three different times when I represent a buyer. 

1.  We discuss closing costs in the initial buyer consultation.  This is part of the down payment and financial discussion that we have.  I will ask many questions about your ability to pay for these costs in addition to the down payment required for your loan.  Closing costs can also include the prepaid expenses such as the home inspection, radon inspection, termite inspection and the first year of home owner's insurance that is required to be paid a year in advance.

2.  Your lender of choice will go over these costs with you when you meet with them to discuss the loan process.  The lender will give you something that is referred to as a good faith estimate of settlement costs.  This amount is not exact.  The lender will use an average tax base and average insurance rate to give you this number.  When you offer on a specific home, it is a good idea to give the lender the exact pricing, closing date, and taxes for the property to give you a closer estimate of what you can expect.

3.  Once you are ready to make an offer, I will prepare a net sheet for you that will sum up the prepaid expenses, the costs from the lender for your loan, and the credits that you will receive from the seller including closing cost assistance and the tax proration.  Depending on the type of loan, you need to have a certain percentage of your own money in the transaction.  This means that sometimes you can only ask for a set amount of the closing costs to be paid by the seller--the lender will advise you and me about this amount.

Some common closing costs and prepaid expenses are as follows:

Origination fee by the lender  (if applicable)

Commitment fee by the lender  (if applicable)

Private Mortgage Insurance Premium  (if your down payment is less than 20%)

Appraisal Fee

Title Opinion

Flood Certification

Credit Report


Recording Fees

Home Inspection

Pest Inspection

Radon Inspection

First Year of Home owners' Insurance Premium

Closing office fee


When you meet with your lender, be sure to ask for a good faith estimate of all of the costs that are associated to the type of loan that you are applying for, some loans may have a lower interest rate, but different fees than one that has a little higher interest rate and less fees.  There are many options out there for loans depending on how long you expect to be in the home or what your equity position may be.  I will be happy to go with you to meet with a lender to make sure that your questions are answered and so that I have a good understanding of how much we need to request when writing an offer. 

Seller concessions are common in Cedar Rapids and Iowa City, so don't be afraid to ask the seller to contribute to pay some or all of your closing costs!  This will leave you with more money to put towards the down payment on your loan or give you extra money for improvements or updates that you would like to make to the home right away!

If you would like to schedule a free buyer consultation with me to see what today's market has to offer for you right now, please give me a call at 319-521-0701 or email me at kfeltman@skogman.com!  I hope to hear from you soon.

Keep smiling!


Posted by


Karen Feltman, REALTOR®, ABR, AHS, CHMS,                                                                      CNE,CRS, e-Pro, green, GRI, SRES, TRC

Keller Williams Legacy Group

4850 Armar Drive SE Ste B

Cedar Rapids, Iowa 52403

Email: karenfeltman@gmail.com

Mobile  319-521-0701


Licensed in the State of Iowa

© 2010-2018 by Karen Feltman, Cedar Rapids/Iowa City Relocation Specialist 


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Ellie Penaranda
239.776.5077 Downing-Frye Realty - Naples, FL
Naples Florida Real Estate - Waterfront & Beach Co

Karen - every buyer would appreciate the detailed information you provided in this post.  Especially a first time buyer. 

Jan 04, 2011 02:47 AM #3
Lora "Leah" Stern 914-772-4528
Coldwell Banker, 170 N Main Street, New City NY 10956 - New City, NY
Real Estate Salesperson

Karen what a great and thorough rundown of costs that a buyer should know before he decides to purchase.  I suggested this one.

Jan 04, 2011 02:59 AM #4
Karen Feltman
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa

@Ellie-Thank you for taking the time to read it.  This is my first public post and I wanted to give as much information as possible. 

@Leah-Thank you so much for the response and suggestion!

Jan 04, 2011 04:12 AM #5
Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation

What a great tutorial this is for buyers.  I love it!

Jan 04, 2011 12:52 PM #6
Karen Feltman
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa

@Margaret-Thank you so much for reading!  I still have a lot to learn about blogging, but it is great to know that I am becoming a better writer.

Jan 04, 2011 01:15 PM #7
John Cannata
214-728-0449 http://TexasLoanGuy.com - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

Karen - Very nice job with this post. Its so important that the buyers understand costs and a few reminders along the way.

Jan 04, 2011 05:39 PM #8
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Karen Feltman

Relocation Specialist in Cedar Rapids, Iowa
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