How Much Are Closing Costs in Washington 2024?
Buying a new home is an exciting and big decision, whether it’s your first home or your third. But before you dive too deep into buying new furniture or appliances, be sure to budget for closing costs.
Closing costs are the final expenses that need to be paid in order to close on a real estate transaction, such as taxes, lender fees, and title insurance. If you’re feeling unprepared or overwhelmed, don’t worry. To help you budget for closing costs, this Redfin article will cover how much closing costs are in Washington state, who pays for them, and which costs you can expect to pay as a buyer and as a seller.
How much are closing costs in Washington?
Before securing the keys to your new home, homebuyers will need to pay for closing costs. Closing costs in Washington typically range from 2%-5% of the home’s 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 purchase price of the home, the type of loan, and any adjustments negotiated with the seller.
Let’s say you’re buying a home in Seattle, where the median home sale price is $885,000. Based on this, you could expect closing costs to be between $17,700 and $44,250. Whereas if you’re buying a home in Tacoma, which has a median sale price of $481,600, closing costs could be anywhere from $9,632 to $24,080.
Who pays closing costs in Washington state?
In most areas, including Washington, 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 Washington
Closing costs in Washington for buyers usually range from 2%-5%. In most cases, you’ll pay earnest money, typically 1% to 3% of the home price, upon reaching mutual acceptance in your home purchase. This deposit is subtracted from your closing costs, reducing the total amount due at closing. Below are some of the common closing costs paid for by the buyer:
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: Although not required, a home inspection is highly recommended. Home inspections generally range from $300 to $500 in cost and are usually paid at the time of service. However, if not, it 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: Lenders may also charge a loan processing fee, covering underwriting and related services. Similar to the origination fee, check with your lender to understand its purpose and possible waivers.
Loan discount points: If you’ve purchased points to lower your interest rate, you’ll usually pay a one-time fee at closing. Each point can lower your rate by 0.25% to 0.5%. Consider your long-term plans, such as how long you plan to own the home or if you plan to re-finance, before purchasing points.
Private mortgage insurance (PMI): When your down payment is under 20%, you’re typically required to pay PMI. Some loans allow upfront PMI payment at closing, giving you the choice between higher upfront costs or increased monthly payments.
Title insurance: Title insurance is a one-time fee paid as part of closing costs. Buyers typically cover both lender and owner title insurance policies.
Homeowners insurance: In Washington , your annual homeowner’s insurance premium may be part of your closing costs.
Homeowners Association dues: For homes in HOA-managed communities, you might have to pay one month’s dues at closing, which can vary depending on the property and covers maintenance and operational expenses.
Property taxes: Buyers may have to prepay property taxes as part of their closing costs in Washington .
Seller closing costs in Washington
How much closing costs are in Washington for sellers will vary between each transaction, 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: If the property is part of an HOA, the seller may need to pay a variety of fees. These can include HOA transfer fees, outstanding dues, and possibly a fee for obtaining HOA documents required by the buyer. The exact fees will depend on the HOA’s rules and regulations.
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 Washington , sellers may pay for owner’s title insurance. Typically, this cost is based on the property’s sale price.
Transfer taxes: Depending on the location and local regulations, sellers in Washington may be responsible for paying state transfer taxes as well as potential local transfer taxes. Transfer taxes are typically based on the property’s sale price and are collected when ownership of the property is transferred from the seller to the buyer.
Median home sale price data from the Redfin Data Center during July 2024.
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