The stress of selling your home, saving up on down payments, engaging lenders and agents, and opening up your home for viewing can make you overlook the cost of closing on your home sale transaction. However, it will be a costly mistake to not plan for the closing costs. If you do not pay these fees early, it will add up, jeopardizing the property purchase.
Therefore, you need to engage an experienced and local real estate agent to help you understand and prepare for all the costs you must pay to secure a problem-free closing sale. It would be best to learn about closing costs to create a strong foothold for you when you want to sell your home. Let’s get started.
What Are Closing Costs?
Closing costs are the expenses you pay when you close your home sale. They include the title insurance, the appraisals, taxes, and attorney fees. There are no rules that determine who pays the closing costs. It all depends on the outcome of the negotiation between you as the seller and the buyer of your property.
Closing costs range from 3-6% of the home’s purchase price. This means that if the property’s purchase price is $200,000, you will have to pay closing costs that range from $6000 to $12,000. The fees also vary from state to state, mortgage lender, and loan type. Put up a buy my house Tennessee ad to get buyers to visit you often.
You might be wondering why closing costs are necessary. However, you must understand that the complexity of the real estate market calls for it. Selling or buying a home requires the assistance of many professionals.
In some states, your home has to be inspected by a state-accredited inspector before you can complete the sale. Insurance coverage, transfer taxes, and more are other things you must cover when you want to close a sale.
The professionals handling the sale process of your home have to be paid. These professionals include your mortgage lender, attorney, real estate agent, et cetera. Furthermore, these costs also cover those issues that can make the property sale null and void in the eyes of the law, for example, taxes. Therefore, you must take the issue of closing costs very seriously, and try to pay them on time.
What Are the Closing Costs in Tennessee?
Tennessee has a complex real estate purchasing process. If you do not have experience in the art of selling a home, you can get hit by unexpected expenses that will leave you financially paralyzed at the end of the day. Therefore, you should educate yourself about the closing costs of Tennessee. You should always set aside 3% to 5% of your property’s total value to ensure that you cover all loose ends while closing a sale.
The closing costs recognized in Tennessee are recording fee, loan origination fee, transfer tax, escrow fee, appraisal fee, home inspection fee, credit report fee, underwriting fee, specialty loan fee, discount points, title insurance, real estate agent commission, property taxes, homeowners insurance, private mortgage insurance, utility payments, and maintenance fee.
These expenses are the costs a buyer or seller must pay when a home sale finishes. In Tennessee, an event where one closes the sale of the property is called a Closing or Settlement. The buyer will sign documents that allow them to obtain the necessary loan to purchase the property. The seller, on the other hand, will sign documents to convey the title of the home to the buyer.
At closing, all the fees must have been paid, leaving only the paperwork, which will need the signatures of all parties involved in the sale. All parties should bring along approved means of identification. Buyers should bring all documents that the lender asks for and the balance of their funds of purchase. Sellers have to submit all the documents the contract requires from them, which will make the sale valid.
Also, the buyer must be made aware of when the first mortgage payment is due at closing. The buyer should also receive the original Warranty Deed and the Owner’s Title Insurance Policy three weeks after signing the closing paperwork. Sellers will also receive back all excess funds from escrow accounts. The complexities of the process should encourage you to get a capable agent and attorney to handle the sale.
Tennessee Closing Cost Inclusions
Closing costs are important to a successful home sale. Remember, it is best to reach out to experienced professionals who can help you maneuver the home selling and buying process easily. Let’s check out what is required of you in Tennessee, whether you are a buyer or a seller.
- Credit Report Fee
You need to submit your credit history and score when you want to buy a home. The credit report fee is the amount of money credit agencies charge when you request your credit report.
- Underwriting Fee
Your lender will collect this amount of money to cover the costs of verifying your loan application and checking your financial situation.
- Loan Origination Fee
This fee covers the establishment of your mortgage. Most times, lenders express this fee as a percentage of your mortgage, about 1% of your loan amount.
- Specialty Loan Fees
You only pay specialty loan fees if you are taking out a non-conventional loan. If you want to take a loan from FHA, for instance, you will have to pay a mortgage insurance premium upfront.
- Discount Points
This cost is optional, and sellers can use it to reduce their mortgage interest rate. One discount point can reduce your interest rate by 1%.
- Appraisal Fee
If you want to take out a mortgage to buy a home, you will need an appraiser to assess the property’s value. You may have to pay up to $400 for an appraiser.
- Survey and Home Inspection Fees
Survey and home inspection fees are non-refundable and will be based on the square footage of the property. A licensed home inspector needs to check out the property for major and minor defects before the sale can go on.
Other inclusions of the closing costs in Tennessee are property taxes, transfer tax, recording fee, title insurance, mortgage payoff, real estate agent commission, attorney fees, title company fees, liens, and private mortgage insurance.
Who Pays Closing Costs in Tennessee?
In Tennessee, both the buyer and the seller share the burden of the closing costs. However, they pay for different things. Sellers pay for the transfer taxes, title and closing fees, recording fees, and owner’s title insurance. Title and closing fees take about 0.43% of the total home value and get paid to the agent who handles your title’s search and transfer.
Typically, it is the seller that covers the expense incurred by the owner’s title insurance. This insurance covers the buyer in case of any problem arising from the transfer of title. However, you may be able to get the buyer to pay off this cost if you negotiate well. It costs about 0.19% of the total value of the property.
Sellers also cover the recordation tax, recording fees, property taxes, homeowners association fees, attorney fees, and mortgage payoff. You can negotiate with the buyer to cover some of the costs above, for example, the recording fee. With proper and successful negotiation, you can save up a lot of money on your home sale. Buyers are typically responsible for the other closing costs.
Pros and Cons of Paying Closing Costs in Tennessee
You have to pay closing costs when you want to close off your home sale. However, it is not always favorable to both parties. Sellers save more since they pay less of the closing costs, which means they get to keep a substantial amount of the property’s payment. Sellers can further alleviate the burden of closing costs if they negotiate well and offset many of the required fees on the buyer.
Buyers get the worst of this arrangement since they have to pay more than the actual price of the property. It means the buyer will need bigger down payments, might have to borrow more, and all these might lead to a higher interest rate they might not be able to handle in the foreseeable future.
Sellers do not get to keep the money’s worth of the property and are still liable to losses if the house stays too long on the market. There are companies that buy houses in Memphis quickly.
Try to get them to buy your home. They will give you cash immediately when you agree with them. There are several benefits of selling your home to cash home buyers. Therefore, try them out when you want to put your home on the market.
Tennessee has a complicated real estate purchasing process. You can check out the cost of selling your house in Memphis here. Remember that with the right help, you can maneuver the process efficiently and pay your closing costs without any problems.