Once you've finally found the perfect home and agreed to a purchase price with the seller, you'll need to go through the closing process, including taking care of the home buying closing costs. This is the final step in a real estate transaction, as the seller legally transfers ownership of his or her home to you.
The closing process typically requires the presence of several individuals, including the seller, the buyer, the real estate agent, a clerk or secretary, and a representative of the escrow company. The good news is that it mainly involves signing a bunch of documents. And after about an hour or two, the process will be finished and the home will be legally yours. However, it's important to note that you may be required to pay closing costs at this time, which is something we're going to discuss today.
Home Buying Closing Costs
Closing Costs: The Basics
Closing costs are the collective fees that must be paid in order to facilitate the transfer of real estate between two parties. The exact fees vary depending on the state, home sale price, type of loan and other factors. Normally, however, closing costs are about 2% to 3% of the home's sale price. According to Investopedia, the average closing costs in South Carolina is $1,895, whereas the national average is $1,847. Therefore, South Carolina falls somewhere in the middle with its closing costs.
Breaking Down Closing Costs
As previously mentioned, closing costs vary depending on multiple factors. However, some of the most common fees associated with closing costs in real estate transactions include the following:
- Application fee
- Attorney fee
- Transfer taxes
- Recording fee
- Pro-rated taxes
- Escrow fee
- Home inspection
- Credit report
- Homeowner's association transfer fee
- Underwriting fee
- VA funding fee (for VA loans)
- and more...
The Buyer Doesn't Always Have to Pay
The good news is that the buyer isn't always required to pay the closing costs, or pay all of the closing costs at least. Different states have different requirements regarding who's responsible for what closing fees. Furthermore, you may ask the seller to pay some of the closing costs as "concessions." If you have any questions about closing costs, such as who pays what, ask your real estate agent for help.
This article was brought to you by Premier Island Properties - A full service real estate firm serving Hilton Head Island and Bluffton, South Carolina. For more real estate news, information, and interesting facts about the Lowcountry, please visit our website.
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