Tired of renting? These Klamath Falls homes for sale are the perfect place to start your home buying journey. Our real estate agents are always available to help you navigate the complicated, and oftentimes, overwhelming home buying process.

Speaking of complicated processes, saving for a home doesn't just mean putting enough money aside for a down payment. You'll also need to plan for closing costs which will come due when you sign your final loan documents.

Understanding what closing costs entail and who pays for them can help you avoid unexpected last-minute financial obstacles.

What Are Closing Costs?

Closing costs are any monies paid in excess of the purchase price of the home. The general rule is that closing costs will amount to 3 to 6% of the property's purchase price, although this can vary depending on certain factors including local property taxes and insurance costs.

The most effective way to deal with closing costs is to pay them out-of-pocket as a one-time expense. That's not to say that you can't finance them. Most lenders will allow you to fold them into the mortgage but then you'll end up increasing your monthly payments and paying interest on those costs.

Both buyers and sellers may be subject to closing costs but most of the costs fall on the buyer. Who pays for what is based on the terms of purchase, which both parties have to agree on.

Closing Costs For Buyers

The buyer typically handles all costs related to the loan, property and required insurance policies.

• Loan-Related Fees
  Three days before closing, you'll receive a Closing Disclosure that will detail all the costs associated with processing the mortgage. Mortgage costs usually include the application fee to cover the administrative expenses of your mortgage. Other costs may include attorney's fees, loan origination costs, mortgage broker fees, and the prepaid interest that accrues between the date of settlement and your first monthly payment.
  
  If the seller has an assumable mortgage and you happen to take over the remaining balance of the loan, you may be charged a processing fee.
  
  
• Property-Related Costs
  The lender may mandate an appraisal to make sure the home is worth the sale price. As a buyer, you'll have to cover appraisal fees as well as the costs of home inspection. Additional costs include any property taxes that accrue from the date of closing until the end of the tax year and escrow fees.
  
  
• Mortgage Insurance Fees
  If you make a down payment of less than 20%, you might be required to get private mortgage insurance, which will come at an additional cost.
  
  Other insurance-related costs often include homeowners insurance, title search fees, owner's title insurance, and lender's title insurance.

Closing Costs For Sellers

A seller pays less of the closing costs. Typically, they're responsible for paying the real estate agent's commission, which also includes the buyer's agents. As a measure of good faith, sellers often pay for the buyer's title insurance.

In some cases, the seller can agree to cover some of the buyer's closing costs in order to seal the deal on the house. However, such seller concessions are nearly unheard of in a seller's market because they have the upper hand. As a buyer, you might be able to negotiate seller concessions in a seller's market if you happen to find a house that's been on the market for far too long.

Even when a seller is willing to pay for closing costs, limits set by Fannie Mae and Freddie Mac as well as FHA and VA loans determine the maximum amount sellers can contribute to the closing costs.

The Takeaway?

Do your research. Consult with both your lender and real estate agent to ensure you get the best deal possible. Contact us for comprehensive guidance on the home buying or selling process.