What Are Closing Costs in Utah for Buyers and Sellers?

When a property transaction concludes, both the buyer and seller incur various fees and expenses known as closing costs. These costs are separate from the property’s purchase price and represent the financial settlement required to transfer ownership. Understanding these expenditures is an important aspect of budgeting for a real estate transaction. The specific amounts and types of closing costs can vary based on the property and the terms of the sale.

Common Closing Costs in Utah

Closing costs in a Utah real estate transaction include various fees and expenses. Many relate to the mortgage, while others cover services for property ownership transfer and clear title.

Lender-related fees are part of the buyer’s closing costs when financing a home purchase. An origination fee, often ranging from 0.5% to 1% of the loan amount, covers the lender’s administrative work in processing and underwriting the loan. An appraisal fee, typically between $500 and $800, is paid to an independent appraiser who determines the property’s market value, protecting both the buyer and the lender.

A credit report fee, around $30, covers the cost of obtaining the buyer’s credit history. Flood certification fees, approximately $15 to $20, may apply if the property is located in a flood-prone area, requiring flood insurance. Buyers may also pay discount points to reduce their loan’s interest rate, with each point costing 0.25% of the loan amount.

Title insurance protects against potential claims or disputes regarding property ownership. In Utah, title insurance generally costs between 0.5% and 1.0% of the home’s sale price. Escrow fees, which cover the services of a neutral third party holding funds and documents until all transaction conditions are met, can range from $500 to $1,500. Recording fees, often around $33, are paid to the county to officially register the property transfer and any mortgage liens. Notary fees may also be charged for the notarization of various legal documents required for closing.

Prepaid expenses are costs paid in advance for a period beyond the closing date. Property taxes are prorated, meaning the buyer and seller each pay for the portion of the year they own the home. The average property tax rate in Utah is approximately 0.50% of the home’s value. Homeowner’s insurance premiums for the first year are paid at closing, ensuring the property is insured from the moment of transfer. If the property is part of a homeowners’ association, prorated HOA dues and potential HOA transfer fees may also be collected.

A survey fee ensures the property boundaries are accurately identified. Attorney fees can be incurred if legal counsel is desired or necessary, typically ranging from $750 to $1,250 for closing services. Utah does not levy a real estate transfer tax, which can be a significant cost in many other states.

Buyer and Seller Allocation of Costs

In Utah real estate transactions, both buyers and sellers contribute to closing costs, though the allocation often follows customary practices. Buyers typically bear costs associated with securing their mortgage, while sellers usually cover expenses related to transferring the property and real estate agent commissions. Many costs can be negotiated between the parties.

Buyers typically pay most lender-related fees, including loan origination, appraisal, and credit report fees. Buyers are also responsible for the lender’s title insurance policy, which protects the mortgage lender’s interest in the property. Additionally, buyers often pay for recording fees associated with their mortgage, prepaid interest, and initial escrow deposits for property taxes and homeowner’s insurance.

Sellers generally cover real estate commissions, which typically range from 5% to 6% of the sale price in Utah. Sellers also commonly pay for the owner’s title insurance policy, which protects the buyer from future title defects. Any outstanding property taxes or homeowners’ association dues up to the closing date are also the seller’s responsibility. Sellers may agree to concessions, such as contributing to a portion of the buyer’s closing costs, which are then subtracted from the sale proceeds.

While typical allocations exist, many closing costs are negotiable between the buyer and seller. The specific terms of the purchase agreement dictate who ultimately pays for certain fees. Negotiating these costs can provide financial relief for either party, particularly in different market conditions. For example, in a buyer’s market, sellers might be more inclined to cover some of the buyer’s expenses to facilitate the sale.

Understanding Your Closing Disclosure

The Closing Disclosure (CD) is a standardized, five-page document that provides the final details about a mortgage loan and all associated closing costs. This document is provided to the borrower as they near the final stages of their real estate transaction. It presents a comprehensive overview of the loan terms, projected monthly payments, and a detailed breakdown of all expenses.

Borrowers are legally required to receive the Closing Disclosure at least three business days before the scheduled closing date. This mandated review period allows adequate time to examine the document thoroughly and compare it against the initial Loan Estimate received earlier in the process. The three-day rule ensures borrowers have an opportunity to identify any discrepancies or ask questions before finalizing the loan.

The first page summarizes the loan terms, including the loan amount, interest rate, and monthly principal and interest payment. The projected payments section provides a breakdown of the estimated monthly costs, encompassing principal, interest, taxes, and insurance. Page two itemizes all closing costs, distinguishing between those paid by the borrower and those paid by the seller, and indicates which third-party services can be shopped for by the borrower.

The “Cash to Close” indicates the total amount the borrower needs to bring to closing. This figure is clearly presented on the Closing Disclosure. Borrowers should compare the final figures on the Closing Disclosure with their Loan Estimate. Any inconsistencies or unclear items should be addressed with the lender or settlement agent before signing.