Who Pays Closing Costs?

Published on May 15th, 2017

When you purchase a home, be aware of all the expenses associated with the transaction. Closing costs are the final payment you will make during this process and cover fees to the lender, government, appraisers and everyone else who worked on this transaction. Who exactly pays the closing costs? The buyers and the sellers both have costs to pay, but they just fall under different categories.

Closing costs can seem like a huge burden, especially for first-time homebuyers. These costs can range anywhere from 2-6% of the sale price, mostly dependent on your location. If you take out a loan for $200,000, your closing costs could be anywhere from $4-12,000. There are multiple other fees that roll into your closing costs as well. Depending on your situation, you could be expected to pay: Lender Origination Charges, Third Party Fees, Title Services and Lenders insurance, Owners Title Insurance and government recording and transfer charges.

Don’t just think that you are the only one that is paying expenses. The sellers have to pay a price for selling their home as well. The sellers can be responsible for paying the commissions of both parties’ real estate agents along with other fees; it all just comes down to the type of situation.

Don’t let the closing cost steer you away from your dream home. With the right research and some negotiating skills, your closing costs could be significantly reduced. If you make the right offer, some sellers will pay for a percentage of the closing costs. For example, if a home’s list price is $200,000, you may be able to offer $195,000, plus 3% toward closing costs. For the seller, that would be worth about $189,000. Keep in mind; it may be more difficult to negotiate in a hot market.

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