Home Buying in 04401>Question Details

Rld, Home Buyer in 04401

what is closing cost and who pays it seller or buyer?

Asked by Rld, 04401 Sun Jun 6, 2010

rld416@myfairpoint.net

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Closing costs can include prorated real estate taxes and prorated association dues, commission, points,transfer taxes,title work, the attorney's cost to close the deal, mortgage payofs, recording fees (for deeds or payoffs). Title insurance premiums, escrowed homeowner insurance & taxes,building inspections can also be included in closing costs. Depending on how an offer is structured- many of these items can be negotiated as to who pays what & how much. The seller normally pays 100% of a commission, half of the transfer taxes, mortgage discharge fees, transfer deed. Buyer normally pays for their title work, attorney's closing fee, title insurance, half of the transfer tax, escrows for homeowner insurance & property taxes, Points and other associated fees can be negotiated as to who pays or how much of percentage a seller or buyer contributes. Sometimes a buyer will agree to pay for fuel left in the oil tank. If you are a non-resident of the State of Maine & the sale is 50K or more- the seller can sometimes pay 2.5% withholding tax to the State (it's sort of like a pre-paid capital gains tax which you may be able to recoup by filing State income tax papers at tax time & can show you do not owe the State any tax monies.If a property is in Tree Growth- there are some lending institutions who will require the seller to remove the entire property from the Tree Growth plan- and in doing so- the seller will incur a penalty that has to be paid to the town the property is in (in some instances- the penalty can be quite substantial). Your lender can provide you with a Good Faith Estimate- which will be a pretty accurate accounting of what your costs will actually be.

Lesley Moose
Better Homes and Gardens Real Estate/Town & Country
0 votes Thank Flag Link Mon Jun 7, 2010
To expand, both Buyer and Seller pay closing costs. Some costs are split, such as state transfer tax, some costs are prorated such as real estate tax, and some costs are paid separately and entirely by either Buyer or Seller. For example, in Maine, the Buyer typically pays for a title search. The Seller almost always pays the commission. As Charlene mentioned, your best bet is to ask for a Good Faith Estimate from a lender.

One other thing to discuss with your agent: Buyers sometimes ask Sellers to pay some or all of their closing costs. It is a negotiation point, like price, part of the overall offer. There are sometimes lender limits on how much the Seller can pay on behalf of the Buyer. Your Buyer Agent can help you structure such an offer.
0 votes Thank Flag Link Sun Jun 6, 2010
Rld,
Charlene gave you a good answer to start, I'll expand a little bit. There are closing costs paid by both buyer and seller in most transactions. A buyer can request in their offer that the Seller pay $X, toward buyers allowable closing costs if you are tight on cash. To the seller, it's the same as a discount.
Buyers closing costs are often around 2% of the purchase price. In addition to closing costs a buyer may have to pay "pre-paids." This would be pre-paying items like home owners insurance, taxes and interest on your loan for the remainder of the month after you close.
Your lender will break down all of these costs to you on a Good Faith Estimate when you apply for your loan.
Good luck with your purchase.
0 votes Thank Flag Link Sun Jun 6, 2010
Closing costs are the various expenses needed to "close" on the sale of the property. These costs include such things as appraisals, title searches, the state transfer tax, points on the loan if any, interest on the loan, pro-rated property taxes and fuel, and real estate commissions. The costs are laid out on the HUD statement, which details the costs and shows who normally pays the associated expenses. However, as part of the negotiations, sellers or buyers can contribute to the other side's costs.

When you apply for a loan, your lender should give you a good faith estimate of the closing costs.

If you search on "sample HUD statement" you will find several links that will provide examples of HUD statements filled out.

If I can help, let me know.
Charlene
0 votes Thank Flag Link Sun Jun 6, 2010
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