Closing costs are the fees associated with buying and selling a home. They may be incurred by either the buyer or seller. Here’s what you should know about the various fees and whether the buyer or seller pays.
Aside from the down payment and earnest money the buyer is responsible for most of the closing costs. Some of the fees can be negotiated and the amounts can vary based on the state, lender, and mortgage type.
Buyers typically pay for property-related fees including the appraisal fee, home inspection fees and loan-related fees. These include the application fee, attorney’s fees, and mortgage broker fee.
Other closing costs for buyers are:
The fees that the seller is responsible for can vary greatly from sale to sale. Buyers will often negotiate to have the seller pay some or even all of the closing costs. One fee that sellers always pay is the real estate commission which is usually 5% to 6% of the selling price.
Almost all fees are negotiable and may be paid by the buyer or the seller. What the seller pays is largely dependent on how motivated they are to sell.
For example, if the seller has had their property listed for a long time and hasn’t had many offers they may choose to pay most or all of the closing costs. On the reverse, if the seller has just listed a property in a desirable neighborhood and has already had several offers they are less likely to agree to pay any of the closing costs.
When paying cash for a property, some of the fees are eliminated. When paying cash there’s no need to pay lender associated fees such as the credit report fee and the origination fee.
Now that you know which closing costs the buyer and seller are responsible for, you should be ready to go to your closing. If you have any questions about closing costs, title insurance, or escrow services, or click here to email us and we’ll be happy to assist.
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