When you’re buying a home, there’s a lot more to factor in beyond just the purchase price. One of the crucial considerations is closing costs. But what exactly are these costs, and why should you care?

What are closing costs?

Closing costs refer to the various fees and expenses you incur when finalizing the purchase of your new home. They typically range from 2% to 3% of the loan amount and cover essential services like loan origination fees, title insurance, attorney fees, and more. These costs matter because they can significantly impact your overall budget for buying a home. 

Understanding and preparing for closing costs is vital because they ensure the legal transfer of property ownership and protect both you and the lender. By budgeting for these expenses upfront, you can avoid last-minute financial surprises and smoothly navigate the home-buying process with confidence.

In Ohio, closing costs usually include the following:

• Loan Origination Fees: These are charged by your lender for processing your loan. They typically cover document preparation, underwriting, and other administrative services.

• Appraisal Fees: Before a lender approves your loan, they need to know the home’s value. An appraisal fee pays for a professional to assess the property’s worth.

• Title Insurance: Ohio requires both an owner’s title insurance policy and a lender’s title insurance policy. This ensures that both parties are protected against potential claims against the property.

• Attorney Fees: While it’s not mandatory to hire an attorney for closing in Ohio, it’s highly recommended. An attorney can help review the title work, handle any legal issues, and ensure that the closing documents are accurate.

• Recording Fees: Local governments charge a fee to officially record the sale of the property, making the transfer of ownership public record.

• Transfer Taxes: Ohio imposes a transfer tax on real estate transactions, which is typically $1 per $1,000 of the sale price. Some counties may have additional transfer fees.

• Settlement Fees: Also known as closing or escrow fees, these are typically split between the buyer and the seller in Ohio. These fees cover the cost of the closing agent or title company managing the closing process.

• Costs associated with property taxes, homeowners’ insurance, mortgage interest, and the home inspection are typically paid upfront rather than at closing.

Who Pays Closing Costs in Ohio?

In Ohio, who pays closing costs can vary and is often negotiable. Typically, the buyer pays for loan-related fees. Title fees, on the other hand, are sometimes split between the buyer and seller, but in Central Ohio, the seller often pays for it entirely. If the selling isn’t covering the costs at closing, you will be required to pay all costs in the form of “guaranteed funds” such as a cashier’s check or wire transfer. Your escrow office or mortgage lender will notify you of the exact amount.

Closing costs are an essential part of buying a home, and knowing what they are and planning for them can make your journey to homeownership much smoother and less stressful. Keep these tips in mind, and you’ll be ready to close on your new home with confidence.

At Vutech | Ruff, Cutler Real Estate, we’re here to make your home-buying or selling experience seamless and enjoyable. We recognize that every buying and selling situation is unique, and we tailor our approach to fit your specific needs and make the whole process as easy as possible for you.

Contact us to get started!