When it comes right down to it, each settlement at Highland Title + Escrow includes a lot of moving pieces…especially money. Today, we want to tackle who pays for closing costs. The short answer is that the buyer pays the buyer’s fees, and the seller pays the seller’s fees. However, we thrive on transparency and sharing what we know so let’s dig a little deeper.
A buyer’s closing costs would include…
- Any fee related to their lender and the cost of getting the loan
- The price of the lender’s title insurance premium
- The amount due for owner’s title insurance
- The amount due for homeowner’s insurance (hazard insurance) policy
- Typical and customary buyer’s closing costs for that area (These can differ depending on where you are located.)
- Recording taxes and fees as agreed in the contract
- Prepaid HOA fees (if applicable) by the month or quarter
- Prorated property taxes
A seller’s closing costs would include…
- The real estate agent commission amounts
- Typical and customary seller’s closing costs for that area
- Any fees related to an outside attorney if one was hired
- The amount needed to pay off the mortgage or equity line of credit
- Final utility bills (depending on the jurisdiction)
Some fees like termite or well/septic inspections can be negotiated in the contract. It’s also important to note that either party could ask the other to assume some of their closing costs, and some of these offers and requests are often market driven. For example, we are coming out of a very friendly seller’s market from 2020 to part of 2022 where sellers often had many offers to choose from. Offers may have been turned down due to a buyer asking for the seller to pay some of their fees and costs, and in that economy, some buyers even offered to assume some of the seller’s costs.
Are closing costs set in stone? Not necessarily. Here are some ways you could attempt to lower your closing costs.
- Read your documents carefully. Make sure you understand exactly what you are paying for and why you are paying it.
- Choose your settlement company. Did you know you have the right to choose your settlement agency? The Highland Title + Escrow professionals look forward to working with you, but you have the option to shop around and find the right fit.
- Shop around for your lender. Some lenders offer incentives if you are an existing customer seeking a mortgage loan. Do some research. It could pay off, and every little bit helps.
- If possible, close at the end of the month. This could make a difference in the amount you are paying in HOA fees or property taxes.
For more detailed information regarding who is paying for closing costs, we recommend you check out our blogs regarding the buyer’s ALTA Settlement Statement and the seller’s ALTA Settlement Statement. We also recommend you take a look at our website for everything we do to provide smooth settlements. You can also get a quote today by utilizing our online calculators.