Closing Costs Buyers and Sellers Must Pay

Real Estate Agent with REMAX Advance Realty II 3233262
After you’ve made your down payment on a home, you may feel tapped out, but closing costs normally will require you to reach even deeper into your pockets. When a home is sold, both buyers and sellers typically end up paying settlement fees. The amounts vary significantly from region to region and depend on the purchase agreements that buyers and the sellers reach during their negotiations.
People often overlook the impact of closing costs until they reach the end of their transactions. Closing costs for buyers are tied to processing paperwork and generally range between 2 percent and 7 percent of the sale price. Some costs stem from directly the loan application while others, such as the appraisal, relate to the dwelling. Closing costs for buyers may include:
  • Fees charged for obtaining a mortgage
  • The cost of home inspections
  • Homeowner's insurance
  • Title insurance and settlement fees
  • Property taxes
  • Transfer taxes, which sometimes are shared with sellers
Realtors® can explain the fees that buyers in your area typically pay and help you estimate what yours will be. You’ll want to be prepared so you don’t get an unpleasant surprise at the closing table.
Consumer advocates long have pushed for more accurate good faith estimates, which lists the fees required in home loan transactions. Your lender must provide the document shortly after you apply for your loan. It is intended to give you an opportunity to shop around for the best mortgage deal. Unfortunately, estimated fees have a way of increasing when the loan closes. Treat your estimate as a guide when comparing costs from different lenders. If your estimated fees rise by significantly, it may be an indication that your lender is simply looking for a bigger payday. You are entitled to an explanation of all fees.
Sellers Also Must Pay
If you are shopping for a home, you may not be sympathetic to the problems that sellers face, but their closing costs can be as expensive as those facing buyers. Sellers typically are expected to pay:
  • Loan payoff  costs, including possible prepayment penalty fees
  • Real estate commissions to agents or brokerages
  • Transfer taxes
  • Title insurance fees
  • Notary fees
  • Attorney fees, if they choose to use a lawyer
After an agreement has been reached to sell the home, sellers remain responsible for such ongoing costs as mortgage interest, property taxes and homeowner association dues until the property officially changes hands. If a home inspector finds problems with a house or condominium, the seller may negotiate a credit to be paid to the buyer at closing.
Whether you are a buyer or a seller, make sure you are financially prepared for closing costs. Factor them in when you calculate the price of real estate transactions. 

Comments (1)

Jean Hanley
Coldwell Banker Kivett Teeters - Hemet, CA
Specializing in Folks Who Want To Buy/Sell Homes

Jose, it is sooooo important for our buyers and sellers to have at least an educated guess as to what they will be responsible for when it comes to closing costs.  You have, once again, provided a great post about this.

Aug 06, 2013 03:11 AM

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