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Closing Costs in Rochester, MN
Closing Costs in Rochester, MN

Closing Costs in Rochester, MN

Learn about the various fees that make up closing costs in Rochester, MN whether you’re a home buyer or a home seller in Minnesota.

What Are Rochester, MN Closing Costs?

Rochester, MN closing costs are the mandated fees and other similar costs that home buyers and sellers are required to pay to complete a home buying transaction. Typically, the home buyer is responsible for most of the fees and charges that make up the closing costs. The average closing costs in Minnesota is $3,621 after taxes. This is approximately 0.91% to 1.21% of the final home sale price.

At closing, the homebuyer and seller are required to sign the final ownership and insurance documents to make the buyer the new owner of the property. This is when the title of the property is transferred to the buyer.

Rochester, MN closing costs are not deducted from or added to the actual cost of a property or the down payment. Rather, closing costs are usually calculated as a distinct cost which often includes a certain percentage of the total cost of the property.

According to Zillow, the median home value in Rochester MN is $243,114. Home values in Rochester have risen by 5.1% over the past year and experts predict they will increase by 2.5% within the next year. Also, the median price of homes currently listed in Rochester is $275,950 and the median price of homes that sold is $238,700.

What Are Rochester, MN Closing Costs

Rochester, MN Closing Costs for Buyers

Most of Rochester MN closing costs are incurred by the buyer. So, when you buy a home in Rochester, Minnesota, your closing costs may include credit report fees, title insurance fees, real estate administrative fees, appraisal fees, loan discount points, lender insurance fees, Pre-paid interest, escrow accounts, mortgage recording fees, PMI insurance, and loan origination fee.  

Mortgage costs are often the largest expense in terms of closing costs. The current average 30-year fixed mortgage rate in Minnesota is 4.29% which is higher than the national average rate of 4.12%.

As mentioned earlier, the closing cost of properties in Rochester, MN often ranges within 0.91% to 1.21% of the final home sale price. However, there are several factors that affect the eventual closing cost. For example, some buyers may request that the seller pay some amounts of the closing costs. Some sellers do agree to pay up to 3% of the buying price to help buyers with the closing costs.

However, when a buyer asks a seller to pay a certain amount out of their closing costs; they are actually increasing the property buying price as well as their mortgage amount. For example, if a seller receives an offer for $350,000 and agrees to pay $5000 towards the buyer’s closing costs, it is precisely the same as getting an offer for $345,000 without agreeing to pay any amount towards the buyer’s closing costs.

Rochester, MN Closing Costs for Sellers

As the name implies, sellers closing costs are the responsibility of the home seller and they are deducted out of the proceeds made from the home sale. The largest of the sellers closing costs are realtor fees and brokerage commission – though they are not typically referred to as closing costs. Other costs include the mortgage recording fee, the abstract or title search, name search, special assessment search, lot location report, the settlement fee, and the state deed tax.  

Rochester, MN Closing Costs for Sellers

How To Reduce Your Closing Costs In Rochester, MN

The various fees and charges in the closing costs may seem overwhelming, mostly for a first-time homebuyer. Nonetheless, there are several different things you can do to lower your closing costs.

Shop for cheaper options

Closing costs aren’t cheap and they are not part of the final price of the home. This is why it’s crucial to shop around for lenders who are ready to offer the least closing cost. Another option is to ask your lender to offer a similar closing cost to the ones offered elsewhere. Aside from requesting quotes from several lenders, you can also get quotes for some other items on your closing costs.

For example, the title search fee, pest inspection fee, and the survey fee, etc. are some of the things you’re allowed to shop around for so you can choose whatever suits you. This means you’re not mandated to opt for the provider your lender wants and you may end up finding providers with lower prices. Interestingly, the closing cost services you have the freedom to shop around for will be indicated as such on your Loan Estimate. So don’t hesitate to do some research and reach out to other providers to find less expensive options.  

Assess the loan estimate

Once you get the loan estimate, don’t hesitate to assess it. Reach out to your lender and go through each of the items listed. Ask for details about what each of the fees covers and why it is worth the price tag. This is one of the easiest ways to figure out padded or unrequired fees. Even more, pay attention to fees with different names but similar functions. It could indicate that the lender is trying to charge you twice to perform just one task. One of such is underwriting fee and processing fee. Though closing costs are now more transparent since Loan estimate replaced the GFE but you shouldn’t take any chance.

Negotiate fees with the lender

Once you have a crystal clear idea of the fees the lender wants you to pay, then it’s time to start negotiating. You must have observed some funny fees while going through the loan estimate. Ask for such fees to be struck off the final price tag. Also, tell your lender to give you the “Closing Disclosure” form. It contains details of your final closing costs.
Negotiate fees with the lender

You’ll have to compare what’s on the Closing Disclosure to what you have on the Loan Estimate. Items on both forms are expected to match. Ask your lender to correct any difference.

Ask the seller to lower the sale price

Some home sellers are ready and willing to reduce the sale price of their property to lower the final closing costs. Also, others could agree to be responsible for some of the closing costs. So depending on how motivated the seller is and the situation of the market, you may be able to negotiate with the seller to lower some of the closing costs.

Close at the end of the month

You can actually minimize some of your closing costs such as the pre-paid daily insurance charges by closing at the end of the month. So you can make your plans towards closing the home-buying deal towards the end of the month so you pay less money upfront.

Request for a rebate on the broker’s commission

You can slash your closing cost by working with a brokerage firm that gives buyers a rebate on its commission if they agree to do some of the legwork by themselves. For example, you may decide to check property listings and open houses all by yourself without the broker. The brokerage company then pays you back by offering a percentage of the commission that ought to be paid to the broker at closing.

Final thought

One of the best methods of settling your closing costs in to pay outright out-of-pocket as a one-time payment. Another option is to roll your closing costs into your loan if your lender allows that. If that’s the case, you’ll be asked to pay interest on that cost throughout the lifetime of the mortgage.

Closing Costs in Rochester, MN Related Information

One of the best methods of settling your closing costs in to pay outright out-of-pocket as a one-time payment. Another option is to roll your closing costs into your loan if your lender allows that. If that’s the case, you’ll be asked to pay interest on that cost throughout the lifetime of the mortgage.

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