Question about closing costs when buying a house from family?

Question

I'm purchasing a house from my parents. Can someone explain to me what's included in closing costs and who usually pays. The buyer? Seller? Should we split it?

Answer 1

Most purchases have the SELLER paying the buyer's closing costs wtih their equity (the seller gets less $ at closing). That was the case in a sister to sister purchase I closed last May.

Of course, you have to negotiate that with your family. It is better to work it out with them beforehand.

Closing costs for buyers generally are:

$350 appraisal

$25 credit report

1% origination to the lender (this gets you a better rate)

$500 processing- for the lender

$700 underwriting- for the lender

$80 tax service fee- for the lender

$12 flood cert - for the lender

$300 escrow - for title officer

$300 various title fees (courier, recording, endorsements, notary)

$600+ for title policy

Did you get qualified? Are you sure you can get financing?

Best of luck!

Answer 2

Closing costs include the lawyer fees, fees associated with the mortgage, property taxes are pro-rated between the buyer and seller and there are recording fees, also there will probably be some kind of state tax.  The title search is usually a few hundred dollars.  The recording fees should be less than $100.  The mortgage fees will depend on who you get a loan with.  The property taxes will depend on whether they have been paid.  The state tax is paid by the seller.  I'm assuming the house isn't listed with a Realtor so there won't be commission to pay.  The buyer usually pays the bulk of the closing costs but sometimes sellers offer to pay all of the closing costs to help a buyer or if the buyer is short on money.  It's really up to you and your parents who pays.  When you call the lawyer to do the paperwork tell him/her that you are buying it from your parents.  Sometimes there's a discount on the taxes if it sells in the family.