One of the most common questions asked to realtors is who pays what costs when it comes to buying and selling.

Closing costs

When closing on a home, the cost for closing can easily add up to around 10% of the buying price, and the buyer will pay the majority of this fee. If you factor in realtor’s commission, a seller could pay up to 6% of the selling price.

Home loan

Most of the costs as a buyer will be related to your home loan, though. This typically includes items such as loan origination, underwriting, credit report, escrow, appraisal, government recording, flood are certification and other miscellaneous costs.

Insurance fees

The buyer will also be accountable for any prepaid insurance fees and interest. The loan origination fees are normally the highest and can be up to 1 to 2% of the home loan.

Since there are so many items to be paid for when buying a new home, it is very important to review them all before closing with your lender to ensure that you can afford everything. If you don’t understand anything, ask!

Real Estate Commission

Sellers are responsible for the real estate commission and this is usually the highest fee they will pay. As a seller, you will also pay for the title insurance and any property taxes up until the closing date. Additionally, there are homeowner’s association fees (if applicable) that the seller is responsible for any other costs that have been stipulated in the contract.

Some exceptions

Sometimes, in order to sweeten the deal and in a slow property market, the seller will pay a portion of the closing costs. This can be more helpful to the buyer than reducing the price of the house.

Mortgages without closing costs are not necessarily cheaper. These costs make their way into the mortgage and the buyer will eventually pay interest on them!

Need some help on your home buying or selling journey?

Give us a call at 205-285-8888!

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