How Much Are Closing Costs in South Carolina?
Navigate South Carolina real estate with clarity. Understand the various expenses involved in closing a property transaction, who is responsible, and how to prepare.
Closing costs are fees and expenses paid by buyers and sellers at the end of a real estate transaction, in addition to the property’s purchase price. These are fees and expenses paid by both buyers and sellers at the culmination of a real estate deal. Understanding these costs is important for managing the financial implications of buying or selling property and helps individuals budget effectively.
Understanding Closing Cost Components
Closing costs include various fees and charges integral to finalizing a real estate transaction in South Carolina. Lender fees cover the costs of processing a mortgage. These include an origination fee, often a percentage of the loan amount, and underwriting fees to evaluate loan applications. Other expenses include appraisal fees ($300-$500) and credit report fees.
Title and escrow fees ensure the legal transfer of property. A title search verifies clear ownership and identifies liens, costing between $150 and $500. Title insurance protects both the lender and owner against future claims. Lender’s title insurance is required, while owner’s title insurance, though optional, is often paid by the seller in South Carolina. Escrow and closing fees cover the services of the agent facilitating the transaction, and notary fees authenticate signatures on legal documents.
Government recording fees register property ownership and mortgages with the county. In South Carolina, these fees are typically small, around $10 to $25 for the first page, with additional charges for subsequent pages. South Carolina also imposes a deed recording fee, a transfer tax calculated at a rate of $1.85 per $500 of property value. This fee is split: $1.30 to the state and $0.55 to the county.
Prepaid items are expenses paid by the buyer at closing for a future period. These often include prorated property taxes, where the buyer reimburses the seller for the portion of the year they will own the property. Homeowners insurance premiums for the first year are paid upfront. If the property is part of a homeowners association (HOA), prorated HOA dues are collected at closing.
Attorney fees are a key closing cost in South Carolina, as the state requires an attorney to oversee real estate closings. The closing attorney conducts a title search, prepares documents, and ensures proper fund and property transfer. Attorney fees often range from $750 to $1,250 for straightforward closings, though higher depending on complexity. Other potential costs include survey fees, pest inspection fees, and home inspection fees, typically ranging from $275 to $400.
Factors Affecting Closing Costs
The total amount of closing costs can vary significantly due to several factors. The loan amount impacts loan-related fees, particularly origination fees, often a percentage of the borrowed sum. A larger loan results in higher origination charges. Similarly, the property’s purchase price influences costs like title insurance premiums and the South Carolina deed recording fee, as these are based on the transaction value.
The type of loan secured by the buyer also affects closing costs. Different loan programs, such as conventional, FHA, VA, or USDA loans, have varying fees and requirements. Some loan types may have upfront mortgage insurance premiums. The choice of lender and other service providers also cause cost variations. Lenders have different fee structures, and the rates charged by title companies, attorneys, and appraisers can differ, so comparing options is advisable.
Location within South Carolina can cause minor variations in costs like localized recording fees or specific service charges, though state-mandated fees remain consistent. The closing date also affects prorated expenses, such as property taxes and homeowners association dues. These amounts adjust based on each party’s ownership period, influencing the final payment.
Buyer and Seller Payment Responsibilities
In South Carolina, buyers and sellers incur closing costs, though their distribution can be negotiated. Buyers are responsible for loan-related costs and property due diligence. These include most loan origination and underwriting fees, appraisal fees, and credit report charges. The buyer also pays for the lender’s title insurance policy, which protects the mortgage lender’s interest. Recording fees for the mortgage and prepaid items like property taxes and homeowners insurance premiums are also the buyer’s responsibility.
Sellers cover costs for transferring ownership and preparing the property for sale. This often includes real estate agent commissions, often their largest expense (5%-6% of sale price). Sellers frequently pay for the owner’s title insurance policy, protecting the buyer’s ownership rights, and the deed recording fee, a transfer tax in South Carolina. Attorney fees for deed preparation and any outstanding property taxes or homeowners association dues up to the closing date are also the seller’s responsibility.
While there are customary allocations for many closing costs, many expenses can be negotiated. For example, sellers might offer concessions towards the buyer’s closing costs, especially in a buyer’s market or for a quick sale. This flexibility allows parties to adjust responsibilities based on market conditions, so reviewing the purchase agreement is important.
Receiving and Reviewing Closing Cost Estimates
Homebuyers receive documents detailing loan terms and associated closing costs. The Loan Estimate (LE) is a three-page form provided by the lender within three business days of a mortgage loan application. This document outlines details, including the estimated interest rate, projected monthly payments, and an initial breakdown of the total closing costs. The LE categorizes costs, allowing borrowers to compare offers from different lenders.
Following the Loan Estimate, the Closing Disclosure (CD) is a five-page form providing the final statement of all loan terms and closing costs. Lenders are required to provide the CD at least three business days before closing. This timeframe allows borrowers to review the final figures and compare them against the initial Loan Estimate. The CD details all fees, including loan costs, title service fees, and government charges, ensuring financial transparency before the transaction.
Reviewing both the Loan Estimate and the Closing Disclosure is important for homebuyers. Compare the figures on the CD to those on the LE to identify any discrepancies or unexpected charges. If questions arise, contact your lender, real estate agent, or the closing attorney for clarification before closing.