Purchasing and selling real estate complex transaction that requires diligence from all interested parties. Before any funds are disbursed, closing costs are checked and balanced among lenders, agents, and title companies to ensure everything is accounted for and is the obligation of the correct person(s). These expenses are called closing costs and must be satisfied before the real estate transaction can be completed. Arrowhead Title, your premier title company at the Lake of the Ozarks, is here today to clarify closing costs, what they are and who is responsible for them.
What is Included in Your Closing Costs?
While there are a few costs that will vary between transactions, there is a standard set of fees that are commonly seen among the closing costs for nearly every transaction. They are as follows:
Loan Origination Fees
Appraisal Fee
Survey Fee
Underwriting Fee
Property Tax Fee
Title Insurance
Title Search
Homeowners Insurance
Homeowners association fees (if applicable)
These fees can and will vary depending on the area, institutions, and other factors but as a general rule of thumb, you can expect to pay roughly 2.5% -4% of the sales price.
Who Pays for the Closing Costs?
It's tradition that buyers cover most, if not all of the closing costs associated with purchasing a home. However, there are instances where buyers can get assistance in bearing the closing costs. Negotiations can be agreed upon that has the seller paying some of the closing costs, or even financing them into the mortgage.
Seller Paid Closing Costs
The seller can contribute to the buyer's closing costs if they so choose. This can be a great incentive for attracting buyers to your property, especially if you advertise this upfront. If you don't advertise this upfront, it can still be a bargaining chip for smoothing over various issues that may arise during the negotiation process.
Lender Paid Closing Costs
Please note, this option is not available with some of the traditional types of mortgage loans, which typically require 20% down payments. However, there are certain loan types that have the ability to drastically reduce closing costs via a reduced down payment requirement, as well as allowing some, if not all of the closing costs to be rolled into the loan amount. If you're interested in this option, contact your mortgage lender to see what options are available for you.
Sellers Also Have Their Own Closing Costs
Sellers, before agreeing to cover the closing costs for your buyer, be sure to factor in the closing costs that you will be responsible for. The most notable being, the REALTORS®'s commission, but you may also have other costs depending on the situation, such as:
Unpaid property taxes
Unpaid homeowners association dues (if applicable)
Attorney fees (if applicable)
Loan payoff fees (or penalties, if appliable)
Liens or judgments against the property
Through negotiations, sometimes the buyers will request the seller to cover additional costs, such as mold and termite remediation, home warranty premium, or just specific repairs/modifications. Your real estate agent can help you through the negotiation process to find a suitable agreement for both parties.
If you're seeking a title company at the Lake of the Ozarks, we encourage you to consider Arrowhead Title. We are your premier escrow and settlement service at the Lake of the Ozarks, and with over three decades of experience, are well suited to handle even the most complicated of real estate transactions. We hope that you have enjoyed your read and learned some valuable information about closing costs. If you have any additional questions, feel free to give us a call to learn more!
The Lake of the Ozarks' Most Trusted Title Company
750 Bagnell Dam Blvd Suite B
Lake Ozark, MO --
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