Minnesota Real Estate & Home Closing Costs
Many inexperienced real estate buyers and sellers are surprised to find out that the selling price of a home isn’t the bottom line in their transaction. Closing costs also play a part in every real estate transaction, and add to the costs for both buyer and seller. Understanding what these closing costs are and having a close estimate of how much they will be is an important part of the decision-making for every home sale or purchase. Some costs are paid by the seller, some by the buyer, and some are shared by both in a typical transaction. Who pays what costs is part of the negotiation process that leads to a Purchase Agreement. Here’s a list of some of the items that add to closing costs:
- Attorney Fees – If either party retains a real estate attorney, that party will be responsible for the fees for attorney services. Many simple residential real estate transactions do not necessarily require the services of an attorney.
- Title Services Costs – There are a number of costs connected to title services. These may be paid by either party, or shared by both parties. Who pays what fees will be negotiated and become part of the Purchase Agreement. Costs include Title Insurance, Closing fees, Title Examination fees, Plat Drawing fees, Name Search fees, Document Handling fees, Recording fees, Wire Transfer fees, and others. You can calculate these fees, as they are most often distributed between buyer and seller by using the online Calculators on this web site.
- Survey Fees – These may be required by some commercial lenders, to clearly define the size and location of the property and other issues.
- Brokerage Commissions – Paid by the seller, these fees are based on the selling price of the property, and are negotiated between the seller and broker. These fees are paid to the real estate broker at closing time from the net proceeds of the sale.
- Mortgage Application Fees – Paid by the buyer to the lender or lenders in the transaction. These may be paid at closing, rolled into the mortgage, or paid in advance to the lender.
- Appraisal Fees – Usually paid by the buyer, appraisals are required by the mortgage lender and very helpful to the buyer in establishing the property’s value..
- Inspection Fees – There will be one or more property inspections involved in the transaction in almost all cases. Most often, these are paid for by the buyer, but are sometimes negotiated.
- Home Warranty Fees – These valuable warranties may be paid for by any party in the transaction, after negotiation. They are often offered by the seller or broker as a marketing strategy, but can be purchased by the buyer as well.
- Property Insurance – Required by all lenders and paid by the buyer, this is usually paid in advance prior to closing, but may be part of the closing costs.
- Pro-rata Property Taxes – Divided between buyer and seller, the amount of these taxes paid by each will depend on the date of the sale. They may also be part of the negotiations.
- Pro-rata Homeowner Association Dues – Normally, these are divided between buyer and seller, based on the date of the transfer of title, but may be negotiated.
- Pro-rata Mortgage Interest – Mortgages are normally paid on a particular day of the month. If the transfer of title occurs on another date, the buyer may have to pay a partial month’s interest at Closing.
- Other Costs – In some cases, other costs may be part of the closing. These vary from location to location or are negotiated by buyer and seller and become part of the costs during closing.
Knowing Your Closing Costs – Minneapolis St. Paul, MN
Early in the title process, you’ll have an estimate of these closing costs, but the amount may change as the title process proceeds. Near the end of the process, however, all parties will receive a Closing Statement, often referred to as a HUD-1 form. This form, required by federal law, details all the amounts due at closing. You should expect to have a very accurate statement of closing costs about 7 days prior to closing. Minor changes in amounts may occur, even after that time, and a final list of costs will be presented at closing.
Trademark Title Services – Minnesota Title Insurance Service Company
At Trademark Title Services, we understand that you need to know what your closing costs will be so you can plan ahead for them. We provide easy-to-use online calculators on this site to help you determine the costs associated with the title process, and will work, along with your agent, to give you an accurate and timely estimate of all costs early in the process, with updates as needed. As your closing date nears, we’ll provide a closing statement that gives you a very precise listing of all costs, as negotiated in your purchase agreement and based on accurate information for other costs. Our dedication to communication with our clients makes us stand apart from other Minnesota title service companies. We never forget that buyers and sellers need accurate information at all times. Please contact us about your real estate transaction, and let us show you how we can help.