Closing Costs are as important as downpayment. A home sale will not close without settling the closing costs, which is true when you buy or sell a home in Colorado. This article will talk about how much the closing costs are in Colorado.
Reading until the end might help you in the future. Make sure to take notes and highlight the parts you will learn.
What Are Closing Costs?
Closing costs are fees that homebuyers and sellers pay to close a home sale. Buyers usually pay title insurance, appraisal, and inspection fees. Sellers typically see their portion taken out of the sale proceeds.
As the name suggests, you typically pay these fees at the closing of a real estate transaction. So, when you buy a house, you should expect closing costs fees so you won't get caught off guard when they finally settle them.
Anticipating these fees before the closing can help you become mentally, emotionally, and financially prepared.
You're not alone if you're wondering about closing costs in Colorado. Let's break them down and consider what you can expect to pay.
Colorado's Closing Costs
In Colorado, closing costs generally fall between 2% and 5% of the home's total purchase price. While this percentage might seem small, it can significantly impact your overall budget, especially when dealing with higher-priced properties.
Let's break it down with some real-world examples. In Denver, where the median home price is around $619,750, your closing costs range from $12,395 to $30,988. That range depends on lender fees, title insurance, and other transaction-related charges. If you're looking at Colorado Springs, the median price is a bit lower at $455,000, so you could expect closing costs to be between $9,100 and $22,750.
Both buyers and sellers are responsible for a share of these fees, but their pay can vary.
Buyer's Closing Costs
The following is a list of closing costs paid by homebuyers, including a short description of the purpose and an estimate.
Appraisal Fee
The appraisal fee is what you'll pay a professional appraiser to assess the fair market value of a property in Colorado. This fee typically ranges from $300 to $500.
Inspection Fee
A home inspection can reveal potential issues and help buyers decide if the property is a good investment. It q usually costs between $300 and $500.
Loan Origination Fee
This fee covers the expense of processing your loan application and is generally a percentage of the total loan amount, typically between 0.5% and 1.5%.
Loan Discount Points
Purchasing discount points can reduce your interest rate by 0.25% to 0.5%. At closing, you'll need to pay a one-time fee of 1% of the mortgage amount.
Private Mortgage Insurance (PMI)
If your down payment is less than 20%, you must pay PMI. Private Mortgage Insurance generally costs 0.5% and 1% of the monthly loan amount.
Title Insurance
Buyers typically cover the cost of both lender's and owner's title insurance. Title insurance costs between $1 and $1.75 per $1,000 of the property's value.
Homeowners Insurance
In Colorado, you might need to prepay homeowners insurance, which averages around $3,820.
Homeowners Association Dues
For properties in HOA-managed communities, you may need to pay a month's dues at closing, ranging from $100 to $1,000, depending on the community's amenities and services.
Property Taxes
Buyers in Colorado are required to pay a portion of property taxes at closing. Colorado has some of the lowest residential property taxes in the country at 0.48%
Seller's Closing Costs
Here are the typical closing costs of sellers in Colorado.
Real Estate Agent Commission Fees
Selling a home involves paying a fixed commission to the agent, often 5% to 6% of the sale price, which can be quite costly. However, starting in August 2024, sellers may have more flexibility in negotiating these fees.
Homeowners Association Fees
To avoid delays or disputes, the seller must settle any outstanding HOA fees or assessments up to the closing date. These fees cover community maintenance and shared amenities.
Property Taxes
Sellers are responsible for property taxes accrued up to the closing date, which are prorated based on the period of ownership. Property taxes ensure that both buyer and seller pay their fair share.
Title Insurance
In Colorado, the seller typically covers the cost of title insurance, which protects the buyer from future ownership disputes or claims. This one-time fee ensures the property has a clear title.
Transfer Taxes
Sellers are responsible for paying state and local transfer taxes, which are a percentage of the sale price and vary by location. These taxes facilitate the legal transfer of property ownership.
For a glance, here's the list of both the buyer and seller's closing costs in Colorado:
Buyer's Closing Costs:
- Appraisal Fee: $300 - $500
- Inspection Fee: $300 - $500
- Loan Origination Fee: 0.5% - 1.5% of the total loan amount
- Loan Discount Points: 1% of the mortgage value (can reduce the interest rate by 0.25% - 0.5%)
- Private Mortgage Insurance (PMI): 0.5% - 1% of the total loan amount per month
- Title Insurance: $1 - $1.75 per $1,000 of the property's value
- Homeowners Insurance: $3,820 on average
- Homeowners Association Dues: $100 - $1,000 (one month's dues)
- Property Taxes: Prorated based on ownership period, with an average effective rate of 0.48%
Seller's Closing Costs:
- Real Estate Agent Commission Fees: 5% - 6% of the sale price
- Homeowners Association Fees: Amount varies; responsible for outstanding fees up to the closing date
- Property Taxes: Prorated based on ownership period
- Title Insurance: $1 - $1.75 per $1,000 of the property's value
- Transfer Taxes: Percentage of the sale price, varying by jurisdiction
These fees are required to transfer ownership and ensure the transaction is legal. Closing costs protect both parties from ownership disputes, inaccurate property appraisals, unpaid taxes, and more.
What Happens When You Don't Pay for Closing Costs?
Failure to settle closing costs will lead to various problems later on. You can expect ownership transfer delays, penalties, loss of money, and canceled deals.
Wrap-Up
If you didn't know that closing costs exist and you're already in the middle of buying a home, don't panic yet; use the time you have left before closing to ensure you can pay your share of the fees. Remember that an informed buyer will navigate things with confidence. Work with a real estate agent to avoid problems like this or to help you work your way out of a problem like this.
Let us know if you need our help with closing costs! We're experienced enough to help you navigate the complex process of a real estate transaction. Call or message us at – or email us at –. You can also visit this link for additional information and related content: https://movetoaurora.com/colorado-closing-costs/
If you would like to receive a FREE Competitive Market Analysis, contact me today. Let us help you find your perfect home!
If you require a Buyer's Agent to represent you during your transaction, please feel free to contact our office at 702-506-5006. We would be glad to work with you to get the best deal possible for your transaction.
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POSTED BY:
Leah Celler
702-506-5006
6041 N Netherland Crt,
Aurora, CO 80019
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