Who has to pay the closing cost?

Both the buyer and the seller pay closing costs, but they pay different things. The seller typically pays the real estate agent commissions, title insurance for the buyer in most markets, documentary stamps or transfer taxes depending on the state, any outstanding mortgage payoff, prorated property taxes, and any negotiated credits or repairs. Seller closing costs usually total 7 to 10 percent of the sale price. The buyer typically pays the loan origination fee, appraisal fee, credit report fee, title search, lender's title insurance, recording fees, prepaid items like homeowners insurance and property tax escrow, and any points paid to buy down the interest rate. Buyer closing costs usually total 2 to 5 percent of the purchase price. In many transactions, the buyer asks the seller to contribute toward their closing costs as part of the offer. This is called a seller concession and it's common, especially for first-time buyers who are tight on cash. The amount a seller can contribute is limited by the loan type, usually 3 to 6 percent of the purchase price.

Closing costs are not paid by just one party; they are a collection of fees that both the buyer and seller are responsible for according to custom and the purchase contract. On the buyer’s side, closing costs generally include loan origination and underwriting fees, appraisal, credit report, title search and lender’s title insurance, escrow/settlement charges, recording fees and prorated property taxes and homeowners insurance. If the home is in an HOA, buyers may also pay HOA transfer fees or reserves. Sellers typically pay the real estate commissions for both listing and buyer’s agents, the deed transfer tax (if any), their portion of escrow or closing fees, any outstanding property taxes and HOA dues through the closing date, and costs to clear title such as satisfying liens. In some markets sellers also cover the owner’s title policy, while in others that is a buyer expense. Most closing costs are negotiable in the purchase contract. A buyer can request a seller credit toward closing costs in lieu of a price reduction, and local customs sometimes dictate which party covers certain fees. Your real estate agent and lender can provide a detailed estimate of which costs apply in your area and how they can be allocated so you know what to expect before you sign the contract.

Hello Michael, buyers pay closing cost or the lender might be able to cover it also please reach out to me I can answers all your questions - Alfred

Michael, Everything is negotiable. If you don't ask, you don't get.

Closing costs are paid according to the terms of the purchase contract made between the buyer and seller. Usually the buyer pays for most of the closing costs, but there are instances when the seller may have to pay some fees at closing too.