Understanding Closing Costs

Closing costs are the fees and expenses you pay to complete a real estate transaction. Both buyers and sellers have closing costs, and they can vary significantly depending on the property, the loan, and the location.\n\nBuyer Closing Costs\n\nBuyer closing costs typically range from 2 to 5 percent of the purchase price. On a $400,000 home, that is $8,000 to $20,000. Common buyer costs include loan origination fees, appraisal fee, credit report fee, title insurance (lender's policy), escrow fees, recording fees, prepaid property taxes and homeowners insurance, prepaid interest, and HOA transfer fees.\n\nSeller Closing Costs\n\nSeller closing costs are typically higher than buyer costs because sellers pay the real estate commission, which is usually 5 to 6 percent of the sale price split between the listing and buyer's agents. Seller costs also include the Real Property Transfer Tax in Clark County, title insurance (owner's policy if agreed), escrow fees, HOA document fees and transfer fees, recording fees for the deed, and any agreed-upon repair credits or concessions.\n\nCosts Vary\n\nClosing costs vary by lender, title company, and the specifics of your transaction. Different lenders have different fee structures. Different title and escrow companies charge different rates. Shopping around can save you money, but make sure you are comparing apples to apples.\n\nAsk for Estimates Early\n\nYour lender is required to provide a loan estimate within three days of your application. This document lists the estimated closing costs. Review it carefully and ask about any fees you do not understand. Your agent can also help you estimate seller closing costs so you know your expected net proceeds.\n\nGetting an estimate early gives you time to prepare financially and ask questions before you are under pressure to close. Do not wait until the week before closing to understand your costs.