Typical Closing Costs when buying a home in Douglas County
Discover Who Pays What and What Your Responsibilities Are
When purchasing a property, both buyer and seller have costs that need to be paid. Often times when your Realtor® writes the offer to purchase a home, it can be negotiated to have the seller pay all of these costs, but that’s not always the case. It’s important to know what they are and who pays for what, so you can structure an offer that best suits your plan of attack.
Here are typical closing costs and who pays for what:
These are fees for obtaining a mortgage loan and are the responsibility of the borrower. Again, the seller can pay these and often does:
- Appraisal: $400
- Underwriting: $695
- Processing: $400
- Credit report: $25
- Flood Certification: $16
- Residential and loan closing fee $375
- County Recording: $165
- Loan policy title insurance: $350
- Miscellaneous title fees: $45 (document preparation, wire, courier)
- Home inspection $300 (not required by the lender but a smart idea)
- Colorado State Tax charged at .0001% of the purchase price.
Escrow set up:
Depending on your down payment, the loan product and the investor will dictate whether or not the lender requires you to be set up for an escrow account. This is where the investor sets up an account in which 1/12th of your total property taxes and homeowners insurance is set into an account to be paid when these items come due. Typically the investor will cushion the account with two extra months which is to help absorb any increase with either item. This is the buyer’s responsibility to set up but can be paid either through the seller or a broker credit.
An estimate of these an escrow account set up on a $250,000 purchase in Highlands Ranch is:
- Homeowners Insurance: $130 total ($65 per month with a 2 month cushion)
- Property taxes: $300 ($150 per month with a 2 month cushion)
At the time of the closing, in addition to the escrow set up, the homeowner insurance policy is paid for one year in advance. This again is the buyers responsibility but can be paid by the seller. With the example used above this amount would be:
- Homeowners Insurance: $780 (1 year paid)
Also, based on the time of the year you are closing and when property taxes are due, it the seller’s responsibility to have the property taxes current. Part of what the title company does is they make sure this is done.
For example, in Colorado the property taxes are paid twice a year if the individual is escrowing, these period are February 28th and June 15th. Let’s say you are closing on June 15th.
- The title company does the research to make sure the Feb 28th payment was made,
- Then they total up the second half the property taxes that are due on June 15th,
- The title company then charges amount that to the seller
- And credits that amount to the buyer, it gets placed into their escrow account or pays the property taxes at that time.
If on the sale of the property, the seller were to earn $50,000 but the second half of the taxes are $1,500 and are due at closing, this would be charged to seller. They would then receive $48,500 and the $1,500 is credited to the buyer’s escrow account or used to pay the property taxes that are due.
More Seller Fees:
In addition to the property taxes, the title company does the research for the seller to make sure the water bill is paid up as well as any homeowner association dues.
If they were used, the sellers are also responsible for paying both Real estate agents involved, the buyer’s and listing agents.
The seller also has title insurance that they are responsible for known as the owner’s policy. This insures to the buyer that the title to the property is free from any outstanding liens.
The bottom line is, the majority of fees to purchase a home are on the buyer’s side. A good ballpark estimate is that about $5,000 is required for closing costs. Depending on your purchase price, down payment and loan amount will dictate this amount. Keep in mind, more often than not, it is negotiated that the seller pays these costs.
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