How Much Are Closing Costs in Utah?

Closing costs are fees and expenses incurred beyond a property’s purchase price, essential for finalizing the transfer of ownership from seller to buyer. Both parties typically incur a share of these expenses, which cover the legal and administrative processes of a home sale. Understanding these costs is important for budgeting and financial planning.

Understanding Closing Costs

Closing costs encompass a range of fees paid to different entities involved in a real estate transaction. These fees are broadly categorized based on their purpose and the services they cover.

Lender fees are associated with securing a mortgage loan. These include a loan origination fee for administrative costs, an appraisal fee to assess property value, and a credit report fee. Lenders may also charge discount points (prepaid interest to lower rates) or an underwriting fee.

Title and escrow fees ensure legal property transfer and secure fund handling. Title insurance protects against title defects like liens or disputes, typically including both lender’s and owner’s policies. Escrow fees are paid to a neutral third party, often a title company, for managing the transaction and disbursing funds. Notary fees cover authenticating signatures on legal documents.

Government recording fees are charged by local authorities to officially record property ownership transfer and mortgage deeds. Prepaid items cover future homeownership costs, such as initial escrow deposits for property taxes and homeowners insurance. Miscellaneous costs may include home inspection fees or survey fees to confirm property boundaries.

Typical Closing Costs in Utah

In Utah, total closing costs vary for buyers and sellers based on the home’s purchase price, loan amount, and specific agreements. Buyers typically face costs ranging from 2% to 5% of the purchase price (e.g., $8,000-$20,000 on a $400,000 home). Seller closing costs generally range from 6% to 10% of the sale price, with real estate agent commissions being a significant component.

Lender fees, like loan origination and underwriting fees, are typically 0.5% to 1% of the loan amount. Appraisals, required by lenders, usually cost around $500. Title insurance rates in Utah typically fall between 0.5% and 1.0% of the home’s sale price.

Escrow fees are often split between buyer and seller, typically averaging 1% to 2% of the purchase price. Government recording fees are modest, around $125. Utah does not impose a real estate transfer tax. Property taxes are prorated at closing, with the statewide average being approximately 0.50% of the assessed value.

Who Pays Which Closing Costs

In Utah, closing costs are typically divided between buyer and seller, though many expenses are negotiable. Buyers are generally responsible for costs related to their mortgage loan, including loan origination, appraisal, credit report fees, and the lender’s title insurance policy. Buyers also typically pay for their own home inspection.

Sellers usually bear the most substantial portion of closing costs, primarily real estate agent commissions, which often range from 5% to 6% of the sale price and are negotiable. The seller also typically pays for the owner’s title insurance policy, protecting the buyer from future title claims. Other seller costs may include outstanding property taxes, HOA dues up to closing, and agreed-upon buyer concessions.

Some closing costs, such as escrow fees, are commonly split between buyer and seller. The specific division of shared costs and seller concessions is often determined during purchase agreement negotiations. Market conditions influence these negotiations; in a seller’s market, buyers might pay more, while in a buyer’s market, sellers might offer more concessions.

Finalizing Closing Costs

Finalizing closing costs involves reviewing the Closing Disclosure (CD), a five-page document from the lender. This CD details all final loan terms, fees, and costs. Lenders must provide the CD at least three business days before closing, allowing time for review. This period ensures transparency and allows borrowers to compare final costs against their initial Loan Estimate.

During this three-day period, buyers should carefully examine the CD for discrepancies or changes from the Loan Estimate. Significant changes, like an Annual Percentage Rate (APR) change or a prepayment penalty, may trigger a new three-day review period. The CD outlines the “Cash to Close,” the total funds the buyer needs at closing.

Funds for closing are typically brought via wire transfer or cashier’s check. The escrow or title company provides specific wire transfer instructions to avoid delays. At the closing appointment, usually at a title company, both buyer and seller sign all necessary legal documents. Once signed, funds are disbursed, and the deed is recorded, the transaction closes, and ownership transfers to the buyer.