What are Closing Costs and Who Pays Them?

Like with any industry, there are a lot of real estate specific terms that are used in real estate transactions. Terms like MLS, co-op, down money, escrow, and closing are just a few. Without being involved in real estate daily, it’s easy to see why folks would not have a clear understanding of these words. Today we’ll look at defining one of these terms and what it means in a real estate transaction: closing costs.

What are closing costs?

Closing costs are any of the fees charged to either a buyer or a seller at time of closing in a real estate transaction. In Lancaster County, closing (or settlement) occurs at the end of a real estate transaction when title to the property is conveyed to the new owner (buyer).

What is included in closing costs?

Closing costs can vary based on the specific real estate transaction. Factors such as real estate company, lender, loan type, cash deal, or what company holds settlement can impact the costs involved. Below we’ve listed the most common closing costs charged to buyers and sellers in Lancaster.

Buyer closing costs: 

  • Lender fees – mortgage application, credit report, appraisal
  • State transfer tax
  • Real estate taxesclso8
  • Deposit money
  • Title insurance
  • Title search
  • Notary fee
  • Recording fees (to record deed & mortgage)

Seller closing costs:

  • State transfer tax
  • Lienable utilities (any utilities provided by your Township or Boro)
  • Mortgage satisfaction
  • Notary fee
  • Tax certification fees
  • Real estate commission (if realtors are involved in the transaction)

Some other optional fees that may be included for either a buyer or a seller include: home warranty, homeowner association fees, or various inspections.

Who pays closing costs?

This may seem like an odd question, given that we just outlined both buyers and sellers are charged closing costs. However, buyers also have the option to ask the sellers to pay all or a portion of their closing costs. This is often referred to as seller assistance or seller help. Typically, seller assistance is a part of the sales contract and is negotiated up front.

Whether you are selling a home in Warwick, looking to purchase a townhome in Penn Manor, or anywhere in between, it’s great to be aware of your closing costs up front before finalizing a sales contract. Stay tuned for more real estate terms defined!

 

 

 

 

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