As home buying and selling in Maine soars above all expectations, more and more of you are asking us, “What exactly are ‘closing costs’? Who pays them? How can we best prepare for them?”
To help you more easily and clearly understand closing costs, we’ve put together this must-know information and guidance.
Definition of “Closing Costs”
Closing costs are specific finances and fees (beyond the down payment) that are charged when you close on your house. Some closing costs are paid by the buyer, while some may be paid by the seller.
It’s important to note that in a booming seller’s market, like the one we’ve been experiencing in Maine this year, sellers are more reluctant to contribute to the buyer’s closing cost. So if you are the buyer, it’s particularly important in 2020 to be financially prepared. Having the ability to pay all your closing costs yourself and/or making an offer over and above the asking price of the house, may be necessary to getting your offer accepted. Today’s buyer needs to be prepared for closing costs typically between 3 and 6 percent of your loan amount.
The A to Z of Closing Costs in Maine
To get a better idea what will make up closing costs in Maine, we invite you to read a previous Coldwell Banker Rizzo Mattson, Realtors®, blog, “Closing Costs in Maine: What’s Included and What’s Not?” You’ll see that closing costs can include—but likely go beyond—title insurance, attorney fees, appraisals, and taxes. Be sure to ask us and/or your lender for a complete list of closing costs a buyer or seller, will be asked to cover.
How to Estimate Closing Costs
As soon as you submit your mortgage application, your lender is legally required to provide you with an LE (Loan Estimate) statement with an accurate estimate of your loan costs. After you receive it, be sure to ask questions of your lender and/or attorney if anything is puzzling or doesn’t appear to add up. No one wants you to experience any surprises.
Before you actually close on your loan, you’ll receive a final document called a Closing Disclosure, which will list all specific costs for which you are responsible. Be sure to compare the Closing Disclosure to the Loan Estimate you received when you applied for your loan. Once you’re clear about what your closing costs will be, check with your closing agent regarding what type of payment is acceptable. Most closing agents will request payment via a cashier’s/bank certified check or may allow funds to be wired prior to the closing.
We hope we’ve provided you with a better understanding of closing costs. Remember - whether you are buying a home in Maine or selling one, we are always here to help you with our friendly, professional service. We invite you to contact us today.