What You Need to Know About Closing Costs
What You Need to Know About Closing Costs
While no one likes having to pay closing costs on a Kenai real estate transaction, it is important to understand how they work. To start, how much closing costs impact you will depend on if you are the buyer or seller and what your contract states. While the seller generally is the one that pays the largest amount of the closing costs, this isn’t always the case.
How do you determine who pays the closing costs?
In a typical Kenai real estate transaction, the buyer pays more of the line items when it comes to the closing costs. However, this can be misleading because generally the seller is going to pay the commission on the sale to both their real estate agent and the buyer’s agent.
In the majority of transactions this will equal close to 6 percent of the sale price of the Kenai house. The commission is usually the largest amount of the closing costs if you are comparing dollar for dollar.
But who is responsible for what part of the closing costs is established in the sale’s agreement between the buyer and the seller when the offer is accepted. Oftentimes, if a buyer is trying to get their offer to stand out among others, they may offer to pay some or all of the seller’s closing costs to sway them towards accepting their offer over the others.
When are the closing costs due?
The majority of closing costs are not paid until closing day. The costs are rolled into the actual closing.
For example, if the seller is responsible for paying the full amount of the commission, the funds will be deducted from the profit that they are making instead of them needing to bring a check for the total. There are also times when the buyers are able to roll their closing costs into their mortgage.
However, if the buyer hasn’t rolled their costs into the mortgage or if the seller’s profit doesn’t cover their portion of the closing costs then they will need to bring a check to closing, or have the funds wired to the escrow agent.
There are several closing costs that need to be paid before the closing. These expenses include things like paying for the home inspection and the home appraisal. The buyer is generally responsible for these costs and is required to pay them to the companies performing the services when the inspections happen.
How do you know how much to pay?
Real estate agents will provide you with a good-faith estimate. This document is going to show you the breakdown of the financial side of your real estate transaction. You will be able to see who is responsible for what.
While many closing costs are non-negotiable, there are a few that you can work on lowering the price of. For example, if you are the buyer you can shop around to find a home inspector or home appraiser at a lower cost.
Closing costs are not always the most exciting part of a Kenai real estate transaction for either party. But they do have an impact on the process. If you have any specific questions about your closing costs be sure to address them with your real estate agent or your mortgage lender.