Understanding Closing Costs: A Simple Guide

Buying or selling a home is an exciting milestone, but it can also come with a expenses that sometimes catch people off guard. One of the most common questions we hear from clients at Brittany Purcell & Associates is, “What exactly are closing costs?”

Closing costs are the fees and expenses you pay when finalizing the purchase or sale of a home. While they may not be the most exciting part of the real estate journey, understanding them can save you from unexpected surprises and help you budget with confidence. Let’s break it down in a simple way.

What Are Closing Costs?

Closing costs are all the additional expenses, beyond the price of the home, that buyers and sellers must settle at the closing table. These can include lender fees, title services, government recording fees, and prepaid expenses such as property taxes or homeowner’s insurance.

Typically, buyers can expect closing costs to range between 2% to 5% of the loan amount, while sellers often pay certain fees related to real estate commissions and title transfers.

Common Buyer Closing Costs

For buyers, closing costs usually include:

• Loan Origination Fees: Charged by your lender for processing the mortgage.

• Appraisal Fee: To confirm the home’s market value.

• Title Search & Insurance: Ensures the property is free of ownership disputes.

• Escrow Fees: Covers the management of funds during the transaction.

• Prepaid Expenses: Property taxes, homeowner’s insurance, and sometimes HOA dues.

It’s important to review the Loan Estimate provided by your lender early in the process. This document gives a detailed outline of what your closing costs will look like, so you aren’t caught off guard on closing day.

Common Seller Closing Costs

Sellers have their own share of expenses, including:

• Real Estate Commission: Typically the largest cost, this covers the services of both the listing and buyer’s agents.

• Title Transfer Fees: Ensuring clear transfer of property ownership.

• Outstanding Liens or Taxes: Any unpaid property obligations must be settled at closing.

While sellers don’t face as many small fees as buyers, their costs can add up quickly, making it important to plan ahead.

Tips for Managing Closing Costs

• Negotiate: Sometimes buyers and sellers can negotiate who pays certain fees. For example, a seller may agree to cover part of the buyer’s closing costs to help finalize the deal.

• Shop Around: Buyers can often shop for services like title insurance or home inspections to find competitive rates.

• Ask Questions: Don’t be afraid to ask your lender or agent for a breakdown of each cost, transparency is key to avoiding surprises.

Final Thoughts

Closing costs may not be the most exciting part of real estate, but they are an essential step in making your home dreams a reality. By understanding what they include and planning ahead, you’ll walk into the closing table with confidence.

At Brittany Purcell & Associates, we’re here to guide you every step of the way, from the first showing to signing the final papers. If you’re ready to buy or sell in Georgia, visit us at brittanysells.com for all your real estate needs.