Closing Costs

Who Pays Closing Costs (Including Title Insurance)?

January 20, 2020

What Are Closing Costs?

Closing costs are those fees related to the services necessary to complete a home loan transaction. These fees are in addition to the amount of money being borrowed for the mortgage and the down payment. Average closing costs typically include some or all of the following fees and expenses:

  • Appraisal Fee – The appraisal fee pays for a licensed professional to determine what the home is worth before a lender will extend a mortgage offer.

  • Credit Report Fee – The credit report fee is what the lender charges to check your credit score and obtain a credit report.

  • Loan Origination Fee – Lenders may charge a fee for initiating the loan.

  • Application Fee – Lenders may charge a fee to process the application.

  • Escrow Deposit – Lenders will usually create an escrow account where funds will be placed at closing for the borrower’s future property tax and homeowner’s insurance bills. 
  • Home Inspection Fee – This is the cost of the home inspection charged by a licensed inspector. It may include special inspections, such as for pests or termites, and may be paid ahead or at closing.

  • Survey Fee – Mortgage lenders often require a buyer to get a property survey to verify property lines before finalizing a loan.

  • Title Insurance – At closing there will be an owner’s policy of title insurance issued along with a lender’s policy.  The owner’s policy insures that the new owner owns the property free and clear of other interests, liens and insures that title is marketable once they are ready to sell the property.  The loan policy of title insurance insures the lender’s new mortgage as the first lien on the property and insures the mortgage until the time it is paid off.

  • Title Examination Fee – Title agencies will search the county records to verify there are not any issues with ownership or liens.

  • Property Taxes – Taxes are paid in arrears in Ohio and will be paid current as of the time of closing.  There is then a proration credit from the seller to the buyer for the taxes that are not yet due and payable. 

  • Recording Fee – The cost to record the transaction in the city or county’s records.

  • Conveyance Fee – The cost to transfer the property at the County Auditor and varies between $1 to $4 per thousand of purchase price.

Who pays closing costs on a home purchase is negotiable and varies amongst regions in Ohio.  Fees associated with the loan are paid by the buyer everywhere. The title fees are split between the buyer and seller, but the split does vary between regions.  The owner’s policy of title insurance is split between the buyer and seller in Northeast Ohio and paid in full by the seller in Central Ohio.

How Much Are Closing Costs?

Closing costs will vary, but they generally range from two and five percent of the total purchase price. Prior to closing, the party responsible for paying the closing costs will receive a Closing Disclosure that provides exact details of the loan and actual closing costs. It is important to carefully review this statement prior to signing to ensure that you understand all of the fees and stipulations and have the correct amount of money at the closing.

For more information about the home-buying process, including Tips to Ensure a Timely Closing and Preparing to Close on Your New Home, visit our blog.

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