How Much Are Closing Costs in Wisconsin?

Real estate transactions involve costs beyond the property price. These additional expenses, known as closing costs, include various fees and charges incurred by both buyers and sellers to finalize a sale. In Wisconsin, these costs are influenced by specific customary practices and regulations.

Common Closing Cost Components in Wisconsin

Real estate transactions in Wisconsin involve a range of common fees and charges that collectively form the closing costs.

Lender Fees

For buyers, lender fees constitute a notable portion of these expenses. These include:
Loan origination fees, covering mortgage processing and underwriting.
Appraisal fees, typically $300 to $500, ensuring property value supports the loan.
Credit report fees.
Discount points, upfront payments to reduce the mortgage interest rate.
Private mortgage insurance (PMI) upfront fees if the down payment is less than 20%.

Title and Escrow Fees

Title and escrow fees provide protection and facilitate the secure transfer of property. Title insurance, approximately 0.5% to 1.0% of the sale price, safeguards against ownership disputes, with separate policies for the owner and lender. A title search verifies ownership and identifies any liens. Escrow or closing fees are paid to the company or attorney managing the closing process and handling all funds.

Government Charges

Government charges also contribute to the overall closing costs in Wisconsin. Recording fees are a flat $30 per document for deeds, mortgages, and other real estate instruments. The Wisconsin Real Estate Transfer Fee (RETF) is $3.00 for every $1,000 of property value. This fee, which helps fund state and county services, is typically paid by the seller.

Prepaid Items and Prorations

Property taxes are prorated between the buyer and seller based on the closing date, with buyers often prepaying a portion of these taxes into an escrow account. Wisconsin’s property tax rates average around 1.38% of a home’s assessed market value. The first year’s homeowner’s insurance premium is often collected at closing. If the property is part of a homeowners association, prorated dues or an initial month’s payment may also be required.

Other Potential Expenses

Beyond these standard costs, other potential expenses may arise during a real estate transaction. These include:
Attorney fees for legal representation, potentially up to $248 per hour.
Home inspection fees, typically $300 to $500, recommended to assess property condition.
Pest or termite inspection fees, $75 to $400, sometimes necessary for certain loan types.
Real estate agent commissions, averaging around 5.71% of the sale price, typically paid by sellers.

Estimating Your Wisconsin Closing Costs

Estimating the total amount of closing costs is important for both buyers and sellers in Wisconsin. For buyers, closing costs generally fall within 2% to 5% of the purchase price. This percentage varies based on the loan amount, chosen lender, and property location, as different counties may have varying fees.

Sellers can expect their closing costs, excluding real estate agent commissions, to be around 2.92% of the home’s selling price. Including commissions, a seller’s total expenses can range from 8% to 10% of the sale price. These percentages offer a general guideline, but actual costs depend on the unique aspects of each transaction.

For buyers securing a mortgage, the Loan Estimate document provides an initial projection of closing costs. Lenders must provide this breakdown within three business days of a loan application. The Closing Disclosure provides a final list of all charges before the transaction is completed. These documents are designed to help consumers understand and compare costs from different providers.

Buyer and Seller Responsibilities and Payment Timeline

In Wisconsin real estate transactions, both buyers and sellers typically share the responsibility for closing costs, though the allocation of specific fees often varies. Buyers commonly cover most lender-related expenses, such as appraisal fees, loan origination fees, and the lender’s title insurance policy. Sellers are generally responsible for the real estate transfer fee and the owner’s title insurance policy.

While some costs are customarily assigned, many closing costs are negotiable between the buyer and seller. Negotiation depends on market conditions and contract terms. For example, a seller might offer concessions to cover some buyer closing costs to facilitate the sale.

Prorations are a common aspect of payment responsibility at closing, especially for ongoing expenses like property taxes and homeowners association dues. These costs are divided between the buyer and seller based on the number of days each party will own the property in the current billing cycle. This ensures each party pays only for their period of responsibility.

Most closing costs are paid at the time of closing, which is when the ownership of the property officially transfers. Any earnest money deposited by the buyer is credited towards the total amount due at closing, reducing required funds. Funds are usually transferred electronically or via certified checks, ensuring a secure completion of the transaction.