Who Pays Closing Costs in Mississippi?

When buying or selling a home in Mississippi, understanding closing costs is an important financial aspect. These expenses go beyond the purchase price and represent fees to finalize the real estate deal. Both buyers and sellers typically incur these costs, settled at closing during the official transfer of property ownership.

Closing costs can represent a significant portion of the transaction’s total cost. Awareness of these expenditures upfront helps all parties budget effectively. They ensure legal, financial, and administrative requirements for property transfer are met.

Understanding Closing Costs

Closing costs encompass fees and expenses for completing a real estate transaction. They compensate professionals and entities involved, with services including loan processing, property valuation, legal documentation, and governmental record-keeping.

These costs are distinct from the down payment and loan principal. They cover steps like title searches, appraisals, and document preparation. Some costs are fixed, while others vary based on transaction specifics like loan amount or property value.

Buyer’s Typical Closing Costs

Buyers in Mississippi face closing costs ranging from 2% to 5% of the home’s purchase price. These expenses are primarily associated with securing a mortgage and ensuring property condition and legal standing. This can amount to thousands of dollars, depending on home value.

Loan origination fees are charged by lenders for processing, underwriting, and preparing loan documents. This fee is often 0.5% to 1% of the loan amount. Buyers also pay an appraisal fee, usually between $300 and $500, to determine the property’s market value for the lender. A credit report fee checks the buyer’s creditworthiness.

Other common buyer expenses include:
Survey fees to confirm property boundaries
Flood certification fees if the property is in a flood zone
Lender’s title insurance policy, which protects the lender from future claims against the property’s title
Pre-paid interest on the mortgage, covering the period from closing to the first monthly payment
Pro-rated property taxes due at closing
Homeowner’s insurance, often requiring the first year’s premium upfront
Recording fees paid to the county to officially register the deed and mortgage

Seller’s Typical Closing Costs

Sellers in Mississippi incur closing costs ranging from 8% to 10% of the home’s sale price. Real estate agent commissions are a substantial seller cost, typically 5.41% to 6% of the sale price. This covers both the listing and buyer’s agents.

Sellers are responsible for the owner’s title insurance policy, which protects the buyer from title defects. Some sellers may incur attorney fees for legal representation. Mississippi does not impose a statewide real estate transfer tax for real property. A mineral documentary tax applies to mineral interest transfers.

Other seller costs include pro-rated homeowner’s association (HOA) fees for the period they owned the home. Outstanding liens or judgments against the property must be settled by the seller. If a home inspection was performed by the seller before listing, that fee is also a seller cost.

Adjusting Closing Cost Responsibilities

While typical allocations exist, closing cost responsibility can be modified through negotiation. This flexibility is standard in real estate transactions. Buyers and sellers can adjust who pays for costs during offer and counter-offer stages.

Seller concessions are a common way to reallocate costs, where a seller pays a portion of the buyer’s closing costs. This can make a property more attractive, especially to buyers with limited upfront cash. Lender credits can also reduce a buyer’s out-of-pocket closing costs, often for a slightly higher interest rate.

Agreed-upon adjustments must be documented in the purchase agreement. This ensures all parties understand their financial obligations before closing. The terms in this legally binding document dictate the final distribution of fees.