How Are Closing Costs Determined?

Closing on a home is exciting even for the most seasoned of buyers. But if you are planning to purchase your first home or even refinance your current mortgage, you may be wondering what to anticipate in terms of closing costs.

Buyer vs. Seller

Both the seller and the buyer can expect to pay settlement costs. On average, the cost to close on a piece of real estate ranges from 3 – 6% of the sale price. To provide a better understanding of what makes up the cost to settle on a home, we have listed the associated fees from both the buyer’s and seller’s perspectives.

 Buyer Closing Costs:             

• Home inspection and appraisal                                   

• Loan origination fee                                                   

• Pre-paid interest (discount points)                               

• Private Mortgage Insurance (PMI)                            

• Transfer taxes                                                           

• Recording fees                                                           

• Underwriting fees                                                       

• Courier fee                                                                 

• Title insurance                                                           

• Title search and closing fees                                        

• Homeowner’s insurance    

Seller Closing Costs:

• Loan pay-off amount

• Real estate commission

• Prorated HOA fees

• Property taxes

• Deed preparation

• Grantor’s tax

• Settlement fee

• Notary Fee

• Termite inspection

• Home warranty

• Home repairs 

In some cases, buyers and sellers may negotiate terms to include seller concessions, where the seller contributes a certain dollar amount towards closing fees on the buyer’s behalf. The contributable allowance of seller concessions, however, will vary based on the type of mortgage for which the buyer is applying.

Have other questions about the closing process? Talk to our knowledgeable team at Linear Title & Escrow today!


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