How Much Are Closing Costs in Arkansas 2024?
Whether you’re a first-time homebuyer or not, buying a home is an exciting and big decision. But before you dive too deep into furniture shopping, picking out new paint colors for your living room, or re-designing your backyard, be sure to budget for closing costs.
Closing costs are the taxes and fees associated with the purchase and sale of a home, such as title insurance and lender fees. Let’s break down how much closing costs are in Arkansas, who pays for them, and what costs you can expect to pay as a buyer and as a seller.
How much are closing costs on average in Arkansas?
Before securing the keys to your new home, homebuyers will need to pay for closing costs. As a general rule of thumb, you can expect closing costs in Arkansas to add up between 2%-5% of the purchase price. But it’s important to remember that this is just a range and the total amount will depend on a number of factors, such as the buyer’s loan, negotiations made with the seller, or the city in Arkansas that the home is located in.
Let’s say you’re buying a home in Little Rock, where the median home sale price is $245,500. Based on this, you could expect closing costs to be between $4,910 and $12,275. Whereas if you’re buying a home in Hot Springs, which has a median sale price of $165,750, closing costs could be anywhere from $3,315 to $8,288.
Who pays closing costs in Arkansas?
In most areas, including Arkansas, both the buyer and the seller will pay closing costs. But, each party’s closing costs amount will vary depending on what they are required to pay. Another thing to keep in mind is that buyers typically pay for closing costs out of pocket, while the seller’s closing cost payments are often deducted from the home sale proceeds.
Buyer closing costs in Arkansas
For homebuyers in Arkansas, you can expect to pay between 2%-5% of the purchase price. If you’ve paid earnest money, which is typically 1%-3% of the home’s price, this amount will be subtracted from your closing costs. Here are a few common closing costs that buyers typically cover:
Appraisal fee: Your mortgage lender will require a home appraisal to ensure the home value is equal to or more than the loan amount. Home appraisals typically cost between $300 and $500, depending on location. If you pay at the time of service, it will not be included in your closing costs.
Inspection fee Home inspections generally range from $300 to $500 – they can vary based on local rates and the property’s specific characteristics. If you don’t pay for the inspection at the time of service, this will need to be paid at closing.
Loan origination fee: Most lenders charge a fee for creating your loan. Be sure to check with your lender what this fee covers and if it can be waived or negotiated.
Loan processing fee: In addition to the origination fee, your lender may also charge a fee for processing your loan. This typically covers underwriting and related services. It’s recommended to discuss this fee with your lender to understand what this fee covers and if it can be waived.
Loan discount points: If you buy discount points to lower your interest rate, you’ll pay a one-time fee at closing. These points can lower your rate by 0.25% to 0.5%, but consider your long-term homeownership plans before paying for a reduced rate.
Private mortgage insurance (PMI): Required for down payments under 20%, PMI might involve an upfront fee at closing, depending on the loan type. It’s usually part of your monthly payment, but some loans offer the option to pay it as a one-time fee.
Title insurance: Title insurance is a one-time closing cost, with buyers commonly paying for both lender and owner policies.
Homeowners insurance: In Arkansas, your annual homeowner’s insurance premium may be part of your closing costs.
Homeowners Association dues: If your property is part of a homeowners association, you’ll likely pay one month’s dues upfront at closing. These fees vary and contribute to maintenance and operational costs.
Property taxes: As part of closing costs in Arkansas, you may be required to prepay a portion of your property taxes at closing.
Seller closing costs in Arkansas
The closing costs covered by sellers in Arkansas can vary, but here are some of the common fees and costs covered by sellers:
Real estate agent commission fees: These fees can be a significant cost for sellers. Commission fees may vary and are subject to negotiation. Sellers should discuss their options with their agent.
Homeowners Association fees: Sellers are generally responsible for settling any outstanding HOA fees or assessments up to the closing date, and they may need to provide HOA documents to the buyer as part of the sale.
Property taxes: Any outstanding property taxes will be due at this time. However, if the seller has prepaid property taxes for the period that extends beyond the closing date, they may be credited back for the portion they’ve paid but won’t use.
Title insurance: As part of closing costs for sellers in Arkansas, sellers may pay for owner’s title insurance. Typically, this cost is based on the property’s sale price.
Transfer taxes: If you’re selling a home in Arkansas, you can expect to pay a state levied real estate transfer tax. These taxes are typically calculated based on the sale price or assessed value of the property. The specific rates and regulations can vary widely, so it’s important to be aware of the requirements in your area and factor in these potential costs when selling a home.
Median home sale price data from the Redfin Data Center during July 2024.
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