If you’re a first time home buyer or planning to purchase a 2nd or 3rd home, it’s important that you understand the financial pieces to a residential real estate transaction. Who pays the closing costs should be one of the several questions asked before you write an offer on the home of your dreams!
Being financially prepared is one of the first steps to home buying. Closing costs are just one of the expenses with home buying that is very important to understand. Closing costs are charged to both the buyer and the seller in a real estate transaction. Knowing who pays what is important for negotiations while making an offer on the home of choice.
It’s customary for the seller to pay the closing cost on behalf of the buyer in many areas. Consult with your real estate agent with a possible fee sheet so you’re prepared before making an offer on your home. Another important factor in your home purchase is what type of market are you in. A fast-moving seller’s market will change who pays the closing costs and absorbing those fees and rolling them into the loan may mean the difference between being the winning bid and having to let go of your dream home. Closing costs are typically 3% of the purchase price for the buyer. The buyer also needs to consider the downpayment needed to make the loan approval. Most downpayment requirements will start at 3% and be up to 20% of the purchase price depending on qualifications and financial stability.
These expenses can add up. Asking the seller to pay concessions (or fees on your behalf) can help you make home buying affordable. If you’re in a buyers market, it’s almost standard to pay closing costs in Minnesota, but don’t let that be a steadfast rule. Downpayment assistance programs and sellers concessions can be a good plan to navigating the financial portions of home buying.
To understand more buyer financial responsibilities, making offers in a fast market, or a full buyers consultation connect with The Herda Home Team at 612-807-4858 or email us at Heidi@HerdaHomeTeam.com.