How Much Are Closing Costs on a House in Ohio?

Closing costs are a collection of fees and expenses that arise during a real estate transaction. These costs are separate from the down payment on a property and represent the various services and taxes associated with transferring ownership. They are an important financial consideration for both buyers and sellers, often amounting to a significant sum that needs to be prepared for in addition to the purchase price.

Understanding Closing Costs

Closing costs encompass the charges for services and processes necessary to finalize a real estate transaction and transfer property ownership. These fees cover a range of activities, including the processing of loan documents, title searches, property appraisals, and government recording.

General categories of services covered by closing costs include lender-related fees for mortgage processing, title services to verify property ownership and insurance, government fees for officially recording the transaction, and prepaid expenses for items like property taxes and homeowners insurance.

Both buyers and sellers typically incur closing costs, though the specific types and amounts can vary significantly based on local customs, negotiated terms, and the specifics of the transaction.

Typical Buyer Closing Costs in Ohio

Lender-Related Fees

Buyers in Ohio encounter various closing costs, which cover the expenses associated with securing a mortgage and formally taking ownership of the property. Lender fees often represent a substantial portion of these costs, including loan origination fees, which are charged for processing the mortgage application.

Buyers might also pay discount points to reduce their interest rate, an appraisal fee to determine the property’s value, and a credit report fee to assess their financial history. Additional lender-related charges can include flood determination fees and underwriting fees.

Title and Escrow Fees

Title and escrow fees are also a significant component of buyer closing costs in Ohio. A title search is conducted to ensure the property’s title is clear of any liens or encumbrances, followed by the purchase of title insurance.

This includes a lender’s title insurance policy, which protects the lender’s investment, and often an owner’s title insurance policy, which safeguards the buyer’s equity.

Escrow fees cover the services of an impartial third party who holds funds and documents until all conditions of the sale are met, and closing fees are charged for the final settlement process.

Prepaid Expenses and Other Fees

Buyers also typically pre-pay certain expenses, which are deposited into an escrow account. These prepaid items often include a pro-rated portion of property taxes, ensuring that the buyer contributes to taxes from the closing date onward, and the initial premium for homeowners insurance.

If the property is part of a homeowners association (HOA), pro-rated HOA dues may also be required at closing.

Government recording fees are also paid by the buyer to formally register the deed and mortgage with the county recorder’s office.

A survey fee may be incurred if the lender requires a property survey to confirm boundary lines or if the buyer desires one. While not always mandatory, buyers in Ohio may choose to engage an attorney for legal representation during the transaction.

Typical Seller Closing Costs in Ohio

Real Estate Commissions

Sellers in Ohio also face a range of closing costs that reduce their net proceeds from a home sale. Real estate agent commissions typically represent the largest expense for sellers, as they are generally responsible for paying the commissions for both the buyer’s and seller’s agents.

This commission is usually a percentage of the final sale price and is negotiated at the time the listing agreement is signed.

Title and Escrow Fees

Title and escrow fees are also part of the seller’s financial obligations. In Ohio, it is common for the seller to pay for the owner’s title insurance policy, although this is a negotiable item in the purchase agreement.

Escrow fees and closing fees are also split or paid by the seller for the services provided by the title company or escrow agent in facilitating the transaction.

Taxes, Recording, and Mortgage Payoff

Sellers are responsible for property taxes up to the closing date, with the amount being pro-rated based on the number of days they owned the property in the current tax period.

Recording fees are incurred by the seller for recording the deed, which officially transfers ownership to the buyer.

Ohio also imposes transfer taxes, known as conveyance fees, on the transfer of real property. The state of Ohio levies a mandatory conveyance fee of $1.00 per $1,000 of the property’s value, and most counties can impose an additional permissive real property transfer tax of up to three mills, meaning an additional $3.00 per $1,000 of value.

These fees are typically paid by the grantor, which is the seller, unless otherwise agreed upon. This is outlined in Ohio Revised Code Section 319.54 and Section 322.02.

Sellers must also account for mortgage payoff costs, which include the remaining balance of any outstanding mortgage on the property. Some mortgage agreements may include prepayment penalties if the loan is paid off early.

Any fees associated with recording the mortgage release, which officially removes the lien from the property, are also typically the seller’s responsibility. If the seller chooses to have legal representation during the sale, attorney fees will also be part of their closing costs.

Estimating Your Closing Costs in Ohio

Estimating closing costs in Ohio involves considering several variables that can influence the final amount. The home’s purchase price and the amount and type of loan secured are primary factors, as many fees are calculated as a percentage of these values.

Individual lender fees can vary, and a buyer’s credit score can affect interest rates and associated costs. The specific property location also plays a role, as county-specific fees, such as conveyance fees, can differ across Ohio’s 88 counties.

A general percentage range for closing costs for buyers in Ohio is 2% to 5% of the loan amount. For sellers, costs are largely driven by real estate commissions, which are a percentage of the sale price, in addition to other fees.

Buyers receive official estimates of their closing costs through specific documents mandated by federal law. Within three business days of applying for a mortgage, a Loan Estimate (LE) is provided, detailing estimated closing costs and loan terms.

Subsequently, at least three business days before closing, a Closing Disclosure (CD) is issued, which provides a final, itemized list of all charges.

Sellers typically receive a settlement statement from their real estate agent or the title company, which outlines all the costs and credits associated with their sale. It is important for both buyers and sellers to carefully review all disclosures and estimates provided by their lenders, agents, and title companies. Asking questions about any unfamiliar or unclear charges can help ensure a comprehensive understanding of all financial obligations before the real estate transaction is finalized.