What Are Closing Costs in Oregon and Who Pays Them?

Home buyers and sellers in Oregon encounter various financial obligations beyond the property’s purchase price, known collectively as closing costs. Understanding these expenses is important for anyone involved in a real estate transaction within the state. These costs represent a collection of fees and charges that finalize the transfer of property ownership.

Defining Closing Costs

Closing costs encompass a range of fees and expenses incurred by both buyers and sellers to complete a real estate transaction. These are distinct from the property’s purchase price and are typically paid at closing. Charges come from various service providers, including lenders, title companies, and government entities.

These costs cover the administrative and legal processes to transfer property ownership, ensuring proper documentation is filed and the property’s title is clear. While some costs are fixed, many are variable and depend on factors specific to the transaction, such as the loan amount and property location. Both buyers and sellers generally incur a portion of these costs, though the specific distribution can vary by local custom and negotiation.

Common Buyer Closing Costs in Oregon

Buyers in Oregon typically face closing costs averaging between 2% and 5% of the purchase price. These expenses include fees related to securing a mortgage and ensuring the property’s condition and legal status.

Common Buyer Costs:

Loan origination fees: Charged by lenders for processing the mortgage application, underwriting, and administrative tasks, ranging from 0.5% to 1% of the loan amount.
Appraisal fee: Typically between $300 and $500, required to determine the home’s market value for the lender’s security.
Credit report fee: Usually between $25 and $50, to verify creditworthiness.
Inspection fees: Cover assessments of the home’s structural integrity, systems, and potential issues, costing several hundred dollars.
Lender’s title insurance: Required by mortgage lenders to protect their financial interest should a title defect arise. Buyers typically pay for this policy. In Oregon, sellers customarily pay for the owner’s title insurance policy, which protects the buyer’s equity.
Escrow fees: Cover the impartial third-party handling of funds and documents, often split between the buyer and seller, ranging from $500 to $2,000.
Recording fees: Usually between $100 and $250, paid to the local government to officially record the deed and mortgage documents.
Prepaid property taxes and homeowners insurance premiums: Often paid into an escrow account to cover ongoing costs.

Common Seller Closing Costs in Oregon

Sellers in Oregon also incur various closing costs, which can represent a substantial portion of their proceeds. These typically range from 6.25% to 9% of the home’s sale price.

Common Seller Costs:

Real estate agent commissions: Often the most significant expense, covering both the listing and buyer’s agents, typically ranging from 5% to 6% of the home’s purchase price. These are negotiable.
Owner’s title insurance: Customary seller expense, covering the buyer against potential title defects or claims. This typically costs between 0.5% and 1% of the property’s value.
Prorated property taxes: Sellers pay their share of annual property taxes up to the closing date. Oregon’s tax year runs from July 1st to June 30th.
Escrow fees: Commonly split between buyers and sellers.
Remaining mortgage payoff balance: Deducted from the sale proceeds.
Home repairs or concessions: May be incurred if negotiated with the buyer.
Transfer tax: Washington County is the only county in Oregon that charges a transfer tax, typically split 50/50 between buyer and seller at a rate of $1 per $1,000 of the sale price.

Key Factors Influencing Closing Costs

Several factors contribute to the variability of closing costs in Oregon, making each transaction unique. The home’s purchase price significantly impacts many fees, as charges like real estate commissions and title insurance premiums are often calculated as a percentage of the sale price. A higher purchase price leads to higher associated closing costs.

The type and amount of the loan also play a role, with different loan products (e.g., conventional, FHA, VA) carrying specific lender fees and requirements. For instance, loans with lower down payments might necessitate private mortgage insurance (PMI), which can involve an upfront premium at closing. The specific lender chosen can also influence costs, as different institutions may charge varying amounts for loan origination, underwriting, and other administrative services.

The time of year for closing can affect prorated expenses, particularly property taxes. Since Oregon’s tax year runs from July 1st to June 30th, the amount of prepaid or credited taxes depends on the closing date. Location within Oregon can also introduce variations; for example, Washington County is unique in charging a real estate transfer tax that other counties do not. Negotiated credits between the buyer and seller, such as seller concessions for repairs or contributions towards the buyer’s closing costs, directly alter the final amounts each party pays.

Reviewing Your Closing Disclosure and Statement

As a real estate transaction concludes, specific documents provide a comprehensive breakdown of all associated costs. Buyers receiving a mortgage loan will receive a Closing Disclosure, a five-page form detailing the final loan terms, projected monthly payments, and all fees and costs. The lender provides this document at least three business days before the scheduled closing date, allowing time for review and comparison against the initial Loan Estimate.

Sellers and cash buyers typically receive a Settlement Statement or Closing Statement, which summarizes all costs owed or credits due to each party. This statement outlines the financial aspects of the transaction, including the purchase price, loan amount, and allocation of various fees. Reviewing these documents ensures accuracy and identifies any discrepancies from previous estimates or agreements. Both the Closing Disclosure and Settlement Statement itemize expenses, allowing parties to verify that all charges are correct before signing the final paperwork.