Everything you need to know about insurance basics, like coverage types, limits, cost and more.
Does the Buyer or the Seller Pay Closing Costs?
Closing costs are paid according to the terms of the purchase contract made between the buyer and seller. Usually the buyer pays for most of the closing costs, but there are instances when the seller may have to pay some fees at closing too. We understand it can be confusing if you’ve never been through the process, so we’ve put together a short video to help clear things up. After watching the video, keep reading for more closing cost information that will have you feeling confident about the home-buying process.
Who Pays Escrow Fees?
Typically, escrow fees are split 50/50 between both parties. Escrow is another name for a protected savings account. In the real estate world, escrow accounts are overseen by a third party that holds the buyer’s and seller’s money until the property changes ownership at closing, where it’s then paid out to the appropriate party or held for later use. Escrows help to safeguard the money in a neutral bank account for the period of time it takes to close on the purchase. So, who pays escrow fees — buyer or seller? Again, it all boils down to the purchase agreement and the language in your contract.
The escrow fee can be in the form of a flat rate, usually around $500 to $2,000, or can cost as much as 1 percent of the total purchase price. Escrow fees cover the cost of transferring or wiring the money to and from an account, notary charges and the costs related to copying and administration of account documents.
And there you have it! You have a better picture of what closing costs are and how to navigate the home purchasing process. Because it’s so important to understand those hidden costs when buying a home, be sure to get financial updates from your lender frequently. While you're reviewing how you want to manage the purchase expenses for your new home, remember to make time to find the best homeowners insurance coverage before closing day. Use our instant home quote tool today to build a policy customized to your unique needs.