Information First Time Home Buyers in Lenawee County: Understanding Closing Costs

First-time Home Buyer Information: Understanding Closing Costs

The fees associated with buying or selling a home are called closing costs. The amount of closing cost is an important factor in the transaction; some are customary, others are negotiable. You should be able to obtain an estimate of what your closing costs will be early in the process.

Buyer Closing Costs

When a buyer applies for a loan the lender is required to provide a “Good-faith Estimate” of their closing costs. The form should break down the various fees associated with the loan and state how much the buyer needs to pay in advance. The fees vary according to the type of loan one applies for and the terms of the purchase agreement. Some common buyer closing costs include:

• Down Payment
• Loan fees, points, application fee, credit report
• Prepaid interest
• Inspection fees
• Appraisal
• Mortgage insurance (PMI, MIP, and others)
• Hazard insurance
• Title insurance
• Recording fees and stamps

Seller Closing Costs:

A seller has to take into consideration the balance due on their mortgage as well as other costs associated with the transaction. The original loan, associated fees and closing costs must all be paid before the seller can receive proceeds. Seller associated costs include:

• Broker’s commission
• Transfer taxes
• Documentary Stamps on the Deed
• Title insurance
• Property tax pro-rations

In addition to the sales price and terms, buyers and sellers often negotiate closing costs. This can even cover things like a buyer is nervous about the condition of the plumbing so the seller agrees to pay for an inspection.

In many cases the buyer agrees to pay full asking price if the seller agrees to pay all allowable closing costs; this is often referred to as seller concessions. Negotiate all you can; there are no rules to negotiating. It never hurts to ask; just make sure everything is covered in writing on the purchase agreement.

The real estate professional you work with should be good at negotiating the best deal possible for you, including negotiating closing costs and other terms of the purchase agreement.

Mark Goedert of Goedert Real Estate has worked with buyers and sellers in South East Michigan for over 50 years. He provides tips and resources to first time home buyers, seasoned real estate investors and anyone who is buying or selling homes.

Mark Goedert of Goedert Real Estate has been in business for over 50 years, working with real estate professionals, agents, developers, investors, REO brokers and first-time home buyers in the Down River area, Calhoun, Hillsdale, Ingham, Jackson, Lenawee, Livingston, Macomb, Monroe, Oakland, Washtenaw, Wayne and South Eastern Michigan Cities and Counties.