How Much Are Closing Costs in South Carolina?

Closing costs are fees and expenses paid at the conclusion of a real estate transaction, distinct from the home’s purchase price or down payment. These financial obligations are a necessary part of buying or selling property, covering charges for services that facilitate ownership transfer and financing. Understanding these costs is important for anyone entering the real estate market, as they significantly impact the overall financial outlay for both buyers and sellers. Budgeting for these expenses helps ensure a smoother transaction.

Buyer Closing Costs

When purchasing a home in South Carolina, buyers encounter several categories of closing costs. These include fees related to securing a loan, charges for title and escrow services, and various prepaid expenses. Buyers receive a Loan Estimate and then a Closing Disclosure, detailing these itemized costs.

Loan-related fees are a significant portion of buyer expenses. A loan origination fee, charged by the lender for processing the loan application, commonly ranges from 0.5% to 1% of the loan amount. Some lenders may also charge discount points, which are upfront payments made to reduce the mortgage interest rate, with each point equaling 1% of the loan. An appraisal fee, usually between $525 and $600 for a single-family home in South Carolina, covers the property’s market value assessment for the lender. Buyers may also pay a credit report fee, often between $25 and $50, for the lender to review their credit history.

Title and escrow fees are also incurred by buyers. A title search fee covers the investigation into property records to confirm clear ownership and identify any liens. Lender’s title insurance, which protects the mortgage lender’s investment against title defects, is generally mandatory for buyers obtaining a loan. Owner’s title insurance, while optional, is recommended as it protects the buyer’s ownership rights against future claims and typically costs between 0.5% and 1% of the home’s purchase price in South Carolina. Attorney closing fees are common, as South Carolina is an attorney-closing state, with buyer attorney fees often ranging from $350 to $1,500.

Additional prepaid expenses and other potential costs contribute to the buyer’s total. Buyers typically prepay mortgage interest for the period between the closing date and the first payment. Property taxes are prorated at closing, meaning the buyer pays for their share of taxes from the closing date through the end of the current tax period. Homeowner’s insurance premiums for the first year are usually paid upfront at closing. Other potential costs include home inspection fees, which average between $325 and $425 in South Carolina, and survey fees if required by the lender or desired by the buyer.

Seller Closing Costs

Sellers in South Carolina also incur a distinct set of closing costs, which can be a substantial portion of their sale proceeds. Real estate commissions typically represent the largest expense for sellers. The average real estate commission in South Carolina is about 5.34% of the home’s sale price, traditionally paid by the seller, covering services for both the listing and buyer’s agents. While new rules may shift how buyer agent commissions are paid, sellers may still offer to cover this as a concession to attract buyers.

Attorney fees are another common cost for sellers. In South Carolina, a portion of attorney fees is allocated to the seller for tasks like preparing legal documents and ensuring clear title for transfer. Seller attorney fees can range from $300 to $1,000, depending on transaction complexity.

Prorated property taxes are a standard adjustment at closing. Since South Carolina property taxes are often paid in arrears, the seller is responsible for paying their share up to the closing date. This ensures the buyer is not burdened with the seller’s tax liability for the period they did not own the home. Mortgage payoff and recording fees are also seller responsibilities, covering costs associated with releasing the existing mortgage and recording the new deed to transfer ownership.

The deed recording fee, sometimes called a transfer tax, is a state and county fee for recording the deed. In South Carolina, this fee is $1.85 for every $500, or fractional part thereof, of the property’s value, with $1.30 going to the state and $0.55 to the county. Although traditionally paid by the seller, this fee can sometimes be negotiated. Homeowners Association (HOA) fees, if applicable, may also be prorated, or the seller might pay an HOA transfer or estoppel fee.

Factors Influencing Closing Costs

Several variables can cause closing costs to differ significantly. The home’s purchase price and loan amount are primary drivers, as many fees are calculated as a percentage of these values. Real estate commissions, loan origination fees, and title insurance premiums directly correlate with the property’s value or borrowed amount. A higher-priced home or larger loan results in higher percentage-based closing costs.

The type of loan obtained by the buyer also affects the closing cost structure. Conventional, FHA, VA, and USDA loans each have specific guidelines regarding allowable fees and who can pay them. Government-backed loans, like FHA and VA, may have different appraisal requirements or limits on certain fees, influencing the total cost. A buyer’s financing choice directly impacts their closing expenses.

The specific lender and service providers chosen by both parties can lead to cost variations. Fees for appraisals, credit reports, and attorney services can differ among providers. Comparing quotes for these services can reveal a range of pricing, even for the same service, highlighting the importance of due diligence.

Negotiation between the buyer and seller also determines who bears certain costs. While some fees are traditionally assigned to one party, many can be negotiated as part of the sales contract, such as seller concessions towards buyer closing costs. The property’s specific characteristics can introduce additional expenses. Homes within a Homeowners Association may have initiation or transfer fees, and properties requiring specialized inspections, like for pests or radon, will incur those associated costs.

Reducing Closing Costs

Buyers and sellers have several strategies to reduce closing costs. One common approach for buyers is to negotiate seller concessions or credits. Buyers can ask the seller to contribute a portion of closing costs, which can significantly lower upfront expenses. This arrangement is often outlined in the purchase agreement.

Shopping around for various services can also lead to savings. Buyers and sellers should obtain quotes from multiple lenders, attorneys, and title insurance companies, as fees for these services vary. Comparing quotes allows individuals to choose cost-effective options without compromising service quality. This competitive shopping can result in significant savings.

Thoroughly understanding the Loan Estimate and Closing Disclosure documents is a proactive step for buyers. These documents itemize all fees and charges, allowing buyers to review them carefully and question any fees that seem excessive or unclear. Identifying and addressing discrepancies before closing can prevent unexpected costs. Sellers should also review their closing statements diligently.

The timing of the closing can impact prorated expenses like property taxes and prepaid interest. Depending on the closing date, the amount of prepaid interest or prorated taxes due at closing can fluctuate. Being aware of this can help with financial planning.

Buyers might also consider lender credits, where they accept a slightly higher interest rate in exchange for the lender covering some or all of their closing costs. This option reduces immediate out-of-pocket expenses but results in higher monthly mortgage payments and increased interest paid over the loan’s life. Another option for buyers is a “no-closing-cost mortgage,” where the lender rolls the closing costs into the loan amount or charges a higher interest rate to cover them. While this eliminates upfront closing costs, it increases the total amount borrowed or the overall cost of the loan due to higher interest.