Who Pays Closing Costs in Ohio: A Buyer and Seller View

Real estate transactions involve financial obligations beyond the purchase price. These expenses, known as closing costs, are incurred by both buyers and sellers to finalize a property transfer. Understanding these costs helps in preparing for the overall expense of buying or selling a home in Ohio.

Understanding Real Estate Closing Costs

Closing costs represent the fees and expenses that arise during a real estate transaction. These fees facilitate the legal and financial transfer of property ownership. They cover services provided by entities involved in the transaction, such as lenders, title companies, and government agencies.

These expenses can include charges for loan origination, property appraisals, title searches, and insurance premiums. Government recording fees and attorney fees also contribute to the total. The exact amount and specific types of closing costs can vary based on the property’s location, the loan amount, and the particular details of the transaction. These costs are paid when the property title is officially transferred from the seller to the buyer.

Buyer Responsibilities for Closing Costs in Ohio

Buyers in Ohio typically face closing costs, often ranging from 2% to 5% of the home’s purchase price. These costs largely stem from obtaining a mortgage loan and ensuring the property’s legal and physical integrity. One common expense is the loan origination fee, charged by the lender for processing the loan application and preparing necessary documentation. This fee often accounts for a percentage of the total loan amount.

Appraisal fees are a significant cost for buyers, covering the evaluation of the property’s value to ensure it aligns with the purchase price. In Ohio, appraisal fees typically range from $300 to $600. Buyers are also responsible for credit report fees, which usually amount to around $15 to $25, used by lenders to assess creditworthiness. Lenders require title insurance to protect their investment, and buyers commonly pay for this lender’s policy.

Survey fees may be incurred to confirm property boundaries and check for encroachments. Recording fees are paid to local government entities for registering the new deed and mortgage documents. Buyers often pay prepaid property taxes and homeowner’s insurance premiums, which are placed into an escrow account to cover future bills. Escrow fees, covering the service that handles the closing funds, typically range from $300 to $700.

Seller Responsibilities for Closing Costs in Ohio

Sellers in Ohio incur closing costs, typically ranging from 6% to 10% of the home’s sale price. The largest portion of a seller’s expenses often relates to real estate agent commissions. In Ohio, the average total real estate commission is around 5.87% of the sale price, which is usually split between the buyer’s and seller’s agents.

The owner’s title insurance policy protects the buyer from future claims or disputes over the property’s title. While sometimes negotiable, it is frequently a seller’s responsibility in Ohio. Transfer taxes, also known as conveyance fees, are imposed by the state or local government for transferring the property title. Ohio has a statewide mandatory tax of $1 per $1,000 of the sale price, with additional county-level fees.

Sellers are typically responsible for prorated property taxes, covering the portion of the year they owned the property up to the closing date. Any outstanding liens or debts secured by the property must be cleared by the seller before the transfer. Sellers may incur attorney fees for drafting documents, reviewing contracts, or addressing complex issues. Attorney fees in Ohio can range from $500 to $1,500 for residential transactions.

Determining and Documenting Closing Costs

The process of determining and documenting closing costs involves several steps and forms. The purchase agreement outlines which party is responsible for specific costs. Many closing costs are subject to negotiation between the buyer and seller, allowing for flexibility based on market conditions and individual circumstances. This negotiation can significantly impact the final financial outcome for both parties.

For buyers, the Loan Estimate (LE) and Closing Disclosure (CD) are documents provided by the lender. The Loan Estimate is provided shortly after applying for a mortgage, summarizing loan terms and estimated costs. The Closing Disclosure outlines the final terms and costs of the real estate transaction, given to the buyer at least three business days before closing. This three-day period allows buyers time to review the finalized figures and compare them against the initial Loan Estimate.

Both buyers and sellers receive a settlement statement, which summarizes all fees and charges involved in the transaction. This document provides a detailed breakdown of who pays what. Reviewing all these documents is important to verify accuracy and understand the total financial commitment before finalizing the property transfer.