How much are closing costs when buying a house with cash?


Pamela Harris

When buying a home, it’s important to factor in all of the associated costs into your budget. One important category of expenses to keep in mind are the closing costs.

Closing costs are funds, in addition to a loan down payment, paid at settlement. These costs typically total 3% to 7% of the home’s purchase price. Costs vary among states, but cash transactions may have fewer costs than financed purchases. If you’re set to buy, here’s what you need to know about closing costs.

How much are closing costs on a house?

This closing costs calculator lets you see an estimate of costs without waiting to apply for a mortgage. Having an estimate while you are saving and shopping for a home puts you in the driver’s seat by giving you time to plan how you’ll pay the total amount due at settlement.

Home shoppers know they need to save a lot for their down payment. However, you may be surprised by the thousands of dollars in closing costs that will be due when you sign your mortgage contract.

During the mortgage process, the lender gives you two official notices of your loan’s closing costs:

  1. The Loan Estimate is given to prospective borrowers within three days of applying for a mortgage.
  2. The Closing Disclosure, which has the final numbers, is delivered three days before closing.

Buying a house with cash doesn’t get you out of home maintenance

We hate to break it to you, but things break. That’s why savvy homeowners put aside some money each month for unexpected repair or maintenance needs. Shure recommends considering a home warranty, which costs about $450 a year and provides coverage on a wide variety of elements such as plumbing, electrical, heating/air conditioning, and appliances.

Homeowners association fees

If you’re buying a house with cash in a community with a homeowners association, you might have to budget for monthly or annual HOA fees. These mandatory fees are paid by everyone who owns in the community and go toward maintaining the common areas.

These fees will be based on the size of your home and the amenities in your community, but for a typical single-family home, HOA fees can cost around $200 to $300 a month.

Who pays closing costs in a cash sale?

Okay, so now we know what needs to get paid, it’s time to talk about who’s doing the paying. This is where things get interesting, as there are few hard and fast rules about who pays what.

Paying for home in cash means there’s no lender to refuse financing at the last minute. It means the buyer can have a low credit score or lose their job and still follow through with the purchase just fine. It means there’s no external reason why the deal won’t go through.

In all but the hottest markets, that’s a seller’s dream come true. And it puts you in a position to negotiate on more than just sale price.

While most of the fees we’ve discussed typically fall to the buyer in one way or another, many of them can also be paid by the seller if the right agreements are reached. It all depends on your specific situation and how much you’re willing to haggle.

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