Buyer Closing Costs

You are ready. You have been watching house hunter on HGTV and stalking Redfin and Zillow in your spare time “for fun.”  You’ve been browsing refrigerators. You’ve been looking at dining room sets. You even have a new espresso machine picked out that would go perfectly in the corner of your new-to-be kitchen. What you haven’t done is buy the house yet. You’ve been saving for your down payment, but then someone mentions buyer closing costs. You didn’t know that was a thing. What are buyer closing costs and how much more will it cost you?

Purchasing a home is a huge investment and many people save for a down payment, but forget about closing costs. While it is very common for closing costs to be negotiated in a transaction, there is no guarantee that a seller will agree to pay your costs for you, so it is best to have a plan.

You will notice that I don’t have an appraisal as a closing cost. That is because as a buyer, you will pay that fee during the transaction. Just like you will pay for home inspections during the transaction as well.

Some or all of these fees will appear on your Final Settlement Statement.  You will see a copy of it before you go in for your signing appointment and it should match the Closing Disclosure that you get as part of your loan.

Lender Fees

Buyers of a home in the Salem Oregon area typically pay for the following lender closing costs at the close of escrow:

  • Loan origination fees (0.5% of the purchase price is common but most lenders charge a flat rate)
  • Underwriting fee
  • Credit report fees
  • Flood Determination Fees
  • Tax Service Fees
  • Administration Fees
  • Lender’s Title Insurance Policy
  • Points to buy down the rate

Impounds (also known as prepaids) such as

  • Prepaid insurance and prepaid taxes for your escrow account with your lender.
  • Prepaid interest on the home loan

Sample buyer closing costs

Title and Escrow Fees

In Oregon, our contracts call for a 50/50 split between buyers and sellers for escrow fees. The escrow fees a buyer typically pays here are:

  • Lender’s Title Insurance
  • Mailing Services
  • Closing fees
  • Document Service Fees
  • Wire Transfer Fees (if used)
  • Recording Services

Investment Property Prorations

If you are buying an investment property or a single-family home with a tenant in it, you will see the following items on your final settlement statement as a credit to you.

  • The security deposit
  • Rent prorations

 

Real Estate Agent Fees

Some real estate companies charge the buyer a transaction fee. We don’t do that, but make sure you know before you hire your agent if you will be charged a transaction fee.  Many buyers don’t realize that the commission offered to the buyer agent on the local MLS system just has to be a number greater than 0.  There are buyer agent offerings of $1 so make sure you know if your agent will be charging you a fee for their service in case the MLS offering is too low.  None of us can work for $1.

  • Real estate commissions
  • Transaction fees

Oregon does not have real estate transfer taxes like many other states have so buyers and sellers don’t have to add that aspect into the negotiation of a home sale. So as you start saving for your down payment, remember you’ll need an additional 2-3% of your expected purchase price to be set aside for fees. You might have to scale down that espresso machine for a Mr. Coffee coffee maker for now.

Learn the step-by-step process to buying a home.