What Are Closing Costs?
In Minnesota real estate transactions, one of the most common questions asked by buyers and by sellers is, "What are closing costs?" and "who pays the closing costs?" Here we explain how closing costs work in Minnesota. We will help you understand the differences between buyer closing costs in Minnesota and seller closing costs in MN. We will also discuss who customarily pays the closing costs in a real estate transaction in Minnesota.
Buyers Closing Costs
When you buy a home in Minnesota, some of the expenses involved are the closing costs. Closing costs for buyers can include appraisal fees, credit report fees, loan origination fees, loan discount points, title insurance fees, lender insurance fees, PMI insurance, Pre-paid interest, escrow accounts, mortgage recording fees, and a real estate administrative fee. The closings costs typically range between 2-4% of the purchase price, but several factors influence this. Some buyers will ask the sellers to pay for their closing costs, and many sellers will agree to pay up to 3% of the purchase price towards the buyer's closing costs. The critical thing to understand is that asking the sellers to pay their closing costs increases the purchase price and their mortgage amount. If a seller gets an offer for $400,000 and agrees to pay $10,000 towards the buyers closing costs, it is essentially the same thing to them if they were to get an offer for $390,000 without agreeing to pay a portion of the buyer closing costs.
Seller Closing Costs
The seller pays the Seller closing costs out of the proceeds from the sale. The realtor fees and brokerage commission are the most considerable and are also considered seller fees. Then there is the state deed tax, the mortgage recording fee, the settlement fee, the abstract or title search, the lot location report, particular assessment search, and the name search. For homes near the average sale price in the Twin Cities, the seller's closing costs tend to be around .5% of the purchase price.
The best mortgage lenders will have mortgage calculators available for you to use for free. You will be able to input various purchase scenarios and get closing cost estimates in real-time and with current interest rates and local tax and insurance prices included.