Castle Rock Rich
Castle Rock Rich
Castle RockCO 80109
 (720) 744-2670

What Are Closing Costs and Who Pays Them?

What Are Closing Costs and Who Pays Them?

Closing costs are a group of fees that need to be paid to several different businesses in order to facilitate the transfer of ownership of a home from one person to another. They are a part of the home buying process that most people know little about until it comes time to pay them. 

What Makes Up Closing Costs?

Exact closing costs depend on whether or not you get a loan, go through a real estate agent, or have an escrow account and vary from around 1.5 percent of the purchase price of a home all the way up to 5 percent. For already existing homes, the most common type of closing cost revolves around the title to the house in the form of title insurance and title search fees. Other types of closing costs include:

  • Bank fees — credit report fees, origination points, underwriting and appraisal fees
  • Inspection fees — termite/pest inspection, home inspection, surveying fees
  • Legal fees — attorney's fees, local/county recording fees

Sometimes, your real estate agent will bundle most of these fees into one invoice, which can be taken care of when you sign the papers to officially close on the house. If they do, you can still request separate invoices for each fee for your own records.

Closing Costs - The buyer's costs can usually be rolled into the mortgage, but you might end up paying thousands of dollars more over the life of the loan due to interest than if you paid the closing costs up front.

Who Pays Closing Costs?

In a standard real estate transaction, the buyer will pay most of the closing costs, but the seller is responsible for paying the entire real estate commission. There are times when a buyer can negotiate some of the closing costs into the contract for buying a home, especially if the house has been on the market for a long time or the seller needs to get rid of the house quickly. It's possible for a buyer to get the seller to pay all of the costs associated with closing on the house, but the buyer will almost always have to pay close to the full asking price for the seller to consider that kind of request. 

The buyer's costs can usually be rolled into the mortgage, but you might end up paying thousands of dollars more over the life of the loan due to interest than if you paid the closing costs up front. For sellers, the real estate commission is taken out of the buyer's check before being transferred to the seller, which usually ends up being around 6 percent of the selling price of the home.

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Rich Pinckney is a trusted name in the real estate market of Castle Rock, Colorado. He works with both buyers and sellers to make sure that every transaction goes smoothly and that any problems are taken care of as soon as they pop up. Call him today at 720-744-2670 to find out more about how he and his team can work for you. Buy, sell or refer a friend to Rich Pinckney and you will be entered in a drawing to win a cruise! The drawing will be on Dec. 31, 2016, and will held through randomizer.org.