Who Pays For The Closing Costs?

Buying and selling real estate is a complicated transaction that requires careful attention and precision from every party involved. In addition to the funds being transferred as a result of the sale, there are multiple expenses that must be satisfied in order to complete the transaction. These expenses are commonly referred to as "closing costs." Arrowhead Title, Inc. is here to help you get a better understanding of closing costs and who is responsible for them.

What Is Included In The Closing Costs?

 While the exact closing costs vary from transaction to transaction, here are a few examples of items that are commonly included in the closing costs:
  • Loan origination fees
  • Title insurance
  • Survey fee
  • Appraisal fee
  • Property tax
  • Underwriting fee
  • Title search
  • Homeowners association fees (if applicable)

The dollar amount associated with the closing costs varies, but in general, buyers can expect to pay somewhere between 2.5% and 4% of the sale price. View our earlier blog post for more information about what is included in the closing costs.

Who Pays For The Closing Costs?

Traditionally, buyers cover most or all of the closing costs associated with buying a home. However, there are a few options that may offer buyers some assistance with this burden. Specifically, buyers may be able to negotiate with the sellers to have them assisting with the closing costs or - depending on the nature of the home loan - finance some of the closing costs into the overall loan.

Sellers Paying For Closing Costs
As the seller, you have the option of contributing to your buyers' closing costs if you so choose. Advertising this offer ahead of time can be a great added incentive and may help you attract additional buyers to your property. If you choose not to advertise this option ahead of time, you can instead offer it to buyers during the negotiation process in order to smooth over various issues that may arise. 

Financing Closing Costs Into The Mortgage Loan
Be aware that this is not an option with many traditional types of mortgage loans, which typically require substantial down payments of 20-25%. However, it may be a possibility for certain nontraditional alternatives. USDA loans, for example, typically offer buyers an opportunity to purchase a home with a 0% down payment and may allow buyers to factor some or all of their closing costs into the overall loan amount. Talk to your mortgage lender to find out if this may be an option for you.

Sellers Are Also Responsible For Their Own Closing Costs

Before sellers agree to assist with the buyers' closing costs, they should be aware of their own closing costs they will be expected to cover. The sellers' biggest closing cost is the REALTORS®'s commission, which generally totals approximately 7% of the total sale price. (This amount will be split between the buyer's agent and the seller's agent.)

Depending on the situation, sellers may also be required to cover additional costs, such as:
  • Loan payoff fees (or, in some cases, penalties)
  • Liens or judgments on the property
  • Unpaid property taxes
  • Unpaid homeowners association dues (if applicable)
  • Attorney fees (if applicable)

In some cases, the buyers may negotiate for the sellers to cover additional costs, such as termite or mold remediation, a home warranty premium, or specific repairs. Your agent can assist you in this negotiation process to find an agreement that satisfies both the buyers' and the sellers' needs.

Trust Arrowhead Title To Conduct Your Transaction!

As the buyer, you have the honor of choosing the title agency you would like to conduct your transaction. If you are shopping for title agencies at the Lake of the Ozarks, we would be honored if you would consider Arrowhead Title, Inc. With over thirty years of experience, our Mid-Missouri title company has the skills, expertise, and attention to detail required to make your transaction a success. Give us a call to learn more about what we can offer you!

 The Lake of the Ozarks' Most Trusted Title Company
Where Accuracy Matters!



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750 Bagnell Dam Blvd Suite B
Lake Ozark, MO 65049
Location: Lake Ozark, MO 65049, USA

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