Closing costs are the fees and prepaid items due when your home purchase or sale is finalized. They are separate from your down payment, and they catch a lot of people off guard. Here is what actually goes into them.
What buyers typically pay
Buyer closing costs usually run about 2% to 5% of the purchase price and fall into a few groups: lender fees (loan origination and related charges), third-party services (appraisal, home inspection, title and settlement fees), and prepaid items that fund your escrow account (property taxes, homeowners insurance, and prepaid interest).
The good news: much of this can be covered. Down payment assistance often applies to closing costs too, and you can sometimes negotiate seller concessions or lender credits to reduce what you bring to the table.
What sellers typically pay
On the sell side, the largest cost is usually the real estate commission. Sellers also customarily pay the Michigan transfer tax and, in many local transactions, the owner's title insurance policy for the buyer.
The exact split of costs is negotiable and varies by deal, which is one reason having an agent who knows the local customs matters.
Michigan's transfer tax
Michigan charges a real estate transfer tax when a property changes hands, and it is customarily paid by the seller. It is made up of a state and a county piece, totaling roughly $8.60 per $1,000 of the sale price. On a $200,000 home, that is around $1,720.
Rates and who pays can vary, so we always confirm the current numbers for your specific sale.
How to lower your closing costs
A few proven moves: use down payment assistance that also covers closing costs, ask for seller concessions (where the seller credits some of your costs), compare title and settlement fees, and ask your lender about credits. Small negotiations here can save you hundreds or thousands.
Down payment assistance and closing costs
This is a point many buyers miss: a lot of down payment assistance programs can be applied to your closing costs, not just your down payment. That can dramatically lower the total cash you need. See what is available in your city on our down payment assistance pages.