So you’ve found the perfect new house, and are ready to make an offer… Great! Naturally, you want to make your offer as attractive as possible. But as you comb through your budget, it occurs to you… Who pays the closing costs?
It’s at this time that you begin to frantically research a topic that you now wish you had looked at beforehand: Closing costs. What are they, and who pays them?
Closing costs are the fees paid upfront at closing by both the buyer and the seller. They cover expenses such as the title search, property taxes, real estate fees, inspections, title insurance, and closing fees. In Florida, these expenses are shared by buyers and sellers. Buyers frequently pay the fees associated with home inspections and obtaining a mortgage. Sellers usually pay the agents’ commissions and taxes. In most cases, buyers can expect to pay roughly 2.5% to 3.5% of the total sale price in upfront closing costs.
Buyer closing costs cover items such as:
- Survey Fees
- Appraisal Fees
- Recording Fees
- Loan Origination Fees
- Credit Report
- HOA Fees
Seller closing costs pay for:
- Agent Commission
- Promissory Note
- Title Search
Closing costs are due upfront, meaning they usually can’t be rolled into the mortgage. Although there are scenarios where the lender might pay for some of the closing costs in exchange for a higher interest rate, this is rarely in the buyer’s favor. Because of this, it’s important to plan ahead and be ready to pay closing costs in addition to your down payment.
With that said, if adding closing costs to the bottom line of your “cash due at closing” puts you just out of reach of your dream home, could you ask the seller to pay more of the closing costs in your offer? Sure – go ahead! You can always ask. …Or you could ask for that same $5,000 to be taken off of the sale price, and enjoy lower payments over the lifetime of the loan. Depending upon what you can swing upfront, the latter might be the wisest choice.
Regardless of whether you approach closing from the buyer’s perspective or the seller’s, a bit of pre-planning will help to make the reality of closing costs less of a strain. If you have questions about the closing process, feel free to contact the team at Turner Title! We’re here to help, and can’t wait to guide you through the process of purchasing (or selling) your home.