Did you know that on either side of the closing table, there will be money changing hands? But when it times to close on a house, it can be confusing on who is paying what. From the commissions to the taxes, each party will have to pay for something. Let’s take a look at what the home buyer and the home seller will each have to pay during closing.
The Buyer’s Costs
Unfortunately, as the home buyer, you will have the burden of paying more expenses than the seller. Most of the buyer’s costs come from actually getting a loan to purchase the property. A loan estimate form received at the beginning of the sale process will tell you how much money you are looking at during closing. Your costs will include:
- Origination fee
- Appraisal fee(s)
- Prepaid interest
- Prepaid insurance
- Flood certification fee
- Credit report fee
- Bank processing fee
- Recording fee
- Notary fee
- Title insurance
- Tax servicing fee
It is important for every home buyer to go through these fees with their lender to understand exactly what they are and how they apply to your loan. It is important to know what you are paying and how much money you will be spending at closing so you can prepare ahead of time. Aside from these expenses, some payments like property taxes and HOA fees are pro-rated and paid at the time of closing. But if you are buying a home toward to end of the property tax period, you could just be paying the balance on the taxes upfront. If you close toward the end of the month, your lender could also ask for the first month’s payment up front.
The Seller’s Costs
As a seller, you have fewer items on your list of estimated closing costs. While the buyer has more payments to make, your payment will consist of one large payment: the real estate commissions. The commission is based on a percentage of the total sale price so it is quite large. In addition to the real estate commission, you will also have to pay the remaining balance on the property taxes and pro-rated HOA dues if they haven’t already been paid.
Negotiate Some Costs
When negotiating on the price for a house, one common negotiation point is closing costs. Many homebuyers ask sellers for some money toward their closing costs, where one or two percent could mean a $5,000 reduction in closing costs and purchase price. Asking for money off the price could mean saving a few dollars each month while asking for money toward closing costs will give you more money in your pocket to go towards moving.
Closing Costs with Simply Referable
Together, with your Simply Referable team, you’ll cut the right deal for the right price with qualified guidance every step of the way. Every team member is committed to selling your home and forming a lasting bond with your family. Thanks to our roots in the Maryland/DC region, we can help you find your dream home. Contact us online and give us a call at 410-983-9045. To see some of the stunning homes we work with, follow Simply Referable on Facebook, Twitter, Google+, Pinterest, YouTube, and LinkedIn.