If you are buying and selling a home in Michigan, you will face various costs. Closing costs come at the end of the process, and having an idea of what you’ll pay can help you be more prepared to manage your finances throughout the home-buying or selling proceedings.
What Are Closing Costs?
Closing costs are the amounts buyers and sellers pay at closing, the last step in buying and financing a home. Closing costs cover fees like a home appraisal, title searches and real estate agent commissions. The exact amount paid often depends on where you live and the type of loan you take out.
Who Pays Closing Costs in Michigan?
Michigan closing costs are paid by buyers and sellers. Closing costs include various fees. Some are traditionally paid separately, while others are negotiable. The buyer can work with the lender and the seller to determine each party’s contributions.
How Much Are Closing Costs in Michigan?
Buyer closing costs in Michigan typically range from 2% to 5% of the home’s purchase price. Sellers pay 8% to 10% of the home’s purchase price, including an agency commission of about 5% to 6%.
Based on a median Michigan home value of $201,100, sellers should expect to pay $16,088 to $20,110 during the closing process. Buyer closing costs might range from $4,022 to $10,055 for a median-value home.
What Do Closing Costs Include?
The fees included in the closing process vary depending on whether you’re the buyer or the seller.
Typical Buyer Closing Costs
Buyers pay varying closing costs depending on lender requirements, government requirements and home purchase situation. Here are a few fees buyers pay in Michigan:
- Appraisal fee: This cost covers a professional appraiser who will look at a home and estimate its market value.
- Loan application and origination fees: The lender charges a portion of the loan amount as compensation for processing loan applications.
- Home inspection: This cost covers an inspection to uncover issues with a home that may impact the final selling price.
- Title insurance: These fees go to a title company to cover the cost of reviewing, adjusting and insuring the title on a home.
- Discount points: These optional points cover pre-paid mortgage interest to lower your interest rate.
- Recording fee: This amount covers the cost of making a real estate transaction part of the public record.
Typical Seller Closing Costs
Like buyers, sellers must also pay costs during the closing process to legally transfer ownership of the house to the buyer and cover other expenses. Here are the primary costs sellers pay in Michigan:
- Real estate agent commission: Sellers pay about 5% to 6% to cover the cost of selling the home.
- State transfer tax: This cost covers the state or county cost to complete a property sale from one owner to another.
- Settlement fees: These fees include various expenses paid to complete the sale, like notary and mailing fees.
- Seller concessions: A seller may agree to concessions to pay some of the buyer’s closing costs like appraisal, title search or inspection fees.
How to Reduce Closing Costs for Buyers and Sellers in Michigan
Buyers and sellers have some flexibility with the costs they pay during the closing process. Government fees and taxes often stay the same, but other fees allow negotiation. Sellers can reduce their closing costs by negotiating their real estate agent commission. The commission is often the largest part of buyer expenses, so a lower rate can significantly reduce closing costs.
Buyers also have options for reducing their closing costs. Some lenders offer discounted rates or waived fees, so choosing the right lender can reduce costs. Buyers can ask the seller to contribute through seller concessions. When buyers make an offer, they might ask sellers to cover part of the closing costs in a dollar amount or a portion of the sales price.
Concessions may cover costs like home inspection, recording fees, title fees and property taxes. The maximum amount the seller can provide in concessions varies based on the down payment on the loan.
Finance Your Michigan Home Purchase With Homesite Mortgage
As a buyer closing on a home, you have various costs. At Homesite Mortgage, we offer several loan types with competitive rates. We provide an exceptional experience, with quick close mortgages and intelligent mortgage advice to streamline home buying.
Reach out online to discuss loan options for your Michigan home purchase. We also have an online loan approval process to enhance the home-buying experience.