All About Greenville SC Real Estate

When you are buying a home, there are many expenses you will need to plan for. In addition to considering the purchase price of the home, your down payment, property taxes, and insurance, don't overlook closing costs, which are fees paid at closing. The seller and the buyer both incur closing costs, but the closing costs are usually higher for the buyer.

How Much Are Closing Costs?

Closing costs are usually 3-5% of the purchase price of your home, but they can be as low as 2% and as high as 7%. On a $250,000 home, closing costs can be anywhere from $5,000 to $17,500 but these costs are split between the seller and the buyer. Buyers are responsible for most closing costs, or 3-4% of the home, because the majority of these costs are associated with the financing. Sellers usually pay around 1-3%. On average, buyers pay $3,700 on closing costs.

Most closing costs are paid at closing when you sign the final documents for the loan and receive the keys, but there are also some closing costs that are paid before the transaction is complete like the home inspection.

You can use a closing costs calculator to better estimate your total closing costs.

Common Closing Costs

The list of closing costs can seem a bit overwhelming if you are buying a home. In most cases, you can expect the following:

• Application fee, which covers the cost for the lender to process the mortgage application. An application fee is not always charged, and when it is, it may include other fees like the appraisal and credit report.
• Attorney fee. In some states, an attorney must review the closing documents on behalf of the lender and/or buyer.
• Courier fee which is the cost of transporting important documents to complete the transaction on time
• Credit report fee
• Discount points. These points are paid at closing and they are considered prepaid interest. One point is equal to 1% of the loan amount and each point you pay lowers your interest rate by 0.25% for a lower mortgage payment.
• Escrow deposit. Buyers are sometimes required to deposit two months of mortgage insurance and property tax payments at closing to establish an escrow account.
• Homeowners insurance. Buyers typically pay for the first year of homeowners insurance at closing.
• Loan origination fee for processing the paperwork for the mortgage
• Pest inspection to check for dry rot and termites.
• Underwriter fee
• Fee for the appraisal of the home to make sure it's worth at least as much as the loan
• Fee for a home inspection to check for serious defects with the home
• Title insurance. Lenders require the purchase of a lender's title insurance policy that protects the lender if there are issues with the title later.
• Title search fee to locate any liens associated with the property that can interfere with ownership and prevent you from assuming clear title
• Survey fee
• Stamp taxes which are taxes on the money you are borrowing for the loan

There may be additional closing costs that are specific to the loan program you have chosen. If you get an FHA loan, you will need to pay the Upfront Mortgage Insurance Premium (UPMIP), which is 1.75% of the loan amount. This premium can also be rolled into the loan. With a conventional loan, you will need to pay Private Mortgage Insurance (PMI) if you put down less than 20% on the home. VA loan borrowers must pay a VA funding fee, which is a percentage of the loan amount. Some borrowers are exempt and the funding fee can also be rolled into the loan.

There are also some closing costs for the seller, which includes taxes on the home sale, attorney fees (if the seller has a lawyer), a fee to transfer the title to the buyer, and a closing fee paid to the title company.