Buying a home is, as we’ve stated many times before, a process riddled with…minutiae. Stressful, seemingly small details that are so significant to the overall process (but can also feel endless) dot the path to each and every transaction. Things like timelines and industry jargon, agent emails and questions about due diligence, and non-negotiable ‘sign your name here’ requirements that can feel scary and overwhelming.
But through it all, we’re here to help however we can.
One MAJOR component of every transaction includes closing costs. These are the fees you’ll pay when finalizing your home purchase—part of the last step in the process. They include the various fees and expenses that must be paid by both the buyer and seller in order to finalize the deal in addition to the down payment. Closing costs generally range from 2% to 5% of the home's purchase price, but Utah’s are a bit lower than the national average (and they can differ by county).
In an effort to familiarize you with more of the (oft shrouded) process behind buying or selling a home, we thought we’d offer a breakdown of some of the common closing fees you might encounter.
BUYERS
Home Inspection Fees: Home inspections are crucial to understanding the condition of the property. The fee for a licensed inspector is typically somewhere between $300 and $500.
Appraisal Fee: Lenders require an appraisal to verify the value of the home. The cost can vary, but it typically falls somewhere between $400 and $600 in Utah.
Title Fees: In order to ensure there are no liens or encumbrances on the property, a title search is needed. In Utah, buyers also typically pay for their lender’s title insurance policy.
Lender Fees: A lender may charge for your application, to check your credit, originate your loan and process your mortgage application. Fees here may also apply if you choose to pay mortgage points to lower your loan’s interest rate.
Escrow Fees: An escrow account may be established in which the buyer deposits money to prepay for a certain amount of property taxes and homeowners insurance premiums.This account holds the earnest money deposit, down payment, taxes, and other expenses.
SELLERS
Recording/Notary Fees: These fees cover the cost of notary services and recording the new deed with the county, which officially transfers ownership of the property.
Property Taxes: Property taxes in Utah are paid on a yearly basis, but at closing, you'll pay a prorated share for the time you own the home during the tax year.
Transfer Tax: Also known as government transfer tax or title fee, this is paid when the title for the property passes from the seller to the buyer.
Conveyance Fee: This fee is unique to Utah and is typically paid by the seller, but it's worth knowing about since it can be part of the overall closing costs in the sale.
Homeowner’s Association (HOA) Fees: If the home is part of an HOA, you may be responsible for paying prorated HOA fees at closing.
Title Insurance: While buyers in Utah usually pay for the lender’s policy, the seller’s typically pay for the owner’s insurance policy.
Agent Commissions: The buyer’s and seller’s agent will each earn roughly 2.5% to 3% of the home’s sale price at closing.
With a little planning, you can budget for these expenses as you get closer to buying or selling. And as always, we can ensure a smoother closing process by answering any questions you have along the way.
Homeworks Property Lab, 66 Exchange Pl., SLC P: 801.810.8696
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