Buying a new home can be expensive, and unfortunately, many buyers tend to forget to budget for the extra expenses that come along with closing costs. Before you begin to look for a new home on the Lowry real estate market, make sure you understand who pays what during a home closing.
First, what are closing costs?
If you’ve never purchased a home before, you may be confused as to what closing costs are, let alone who should pay for them. Closing costs are fees associated with closing the deal to purchase a new home. Prior to a closing, both the buyer and seller will receive a document with line items such as “real estate agent’s commission” and “title insurance” along with the cost of each. Buyers will be responsible for some fees, while sellers will be responsible for others. Learn more about closing costs
What do buyers pay?
Many fees that the buyer has to pay are associated with obtaining a loan to pay for the house. If you are financing your new home, you may have to pay the credit report fee, bank processing fee, prepaid insurance, tax servicing fee, flood certification fee, origination fee, recording fee, notary fee, title insurance, prepaid interest, and appraisal fee. All of this information will not be found on the closing statement, but rather on a document known as a loan estimate form, which is provided by the lender. Buyers may also be responsible for paying the home inspection and survey fees.
What do sellers pay?
Although sellers are not responsible for as many line items on the closing document as buyers are, they are responsible for the one expense that could be the highest of them all: a real estate agent’s commission. The seller will need to pay the agent a percentage of the sales price of the home. This percentage is agreed upon when the agent is hired to take on the listing.
In some situations, sellers will also need to take care of any unpaid homeowner's association fees, as well as the remaining balance of the property tax on the home that is being sold.
Is there room to negotiate?
If the seller is motivated to sell and has not had much interest from other buyers, you may be able to negotiate the terms of closing costs. Some sellers are willing to take some of the burden off of buyers in order to close the deal, while others are not interested in helping buyers come up with the cash for closing costs. You never know until you ask, so talk to your agent about whether it’s a good idea to mention this to a seller when presenting an offer on a listing.
Now that you know what closing costs you will be responsible for, are you ready to move forward with purchasing a home? Contact Elevation Realty
to be connected to a team of experienced real estate experts ready to help you on your home buying or selling journey.