There are many closing costs associated with buying Oahu real estate. Closing costs are the bundle of fees, other than the down-payment and loan or cash funds toward purchase price, associated with the buying a home on Oahu or selling an Oahu home. Certain fees are automatically assigned to either the Buyer or the Seller; other costs are either negotiable or dictated by the local custom for transactions for real estate on Oahu.
BUYER CLOSING COSTS ON OAHU
When an Oahu home Buyer applies for a loan, lenders are required to provide them with a good-faith estimate of their closing costs. Some of the figures in these estimates are provided by the escrow and title company. Others are lender costs. The fees vary according to several factors, including the type of loan for which they applied and the terms of the Purchase Contract. Likewise, some of the closing costs for Oahu real estate, especially those associated with the loan application, are actually paid in advance. Some typical Buyer closing costs for the purchase of Oahu real estate include:
- The balance of the down payment (total down payment required minus the earnest money deposit)
- Loan fees (points, application fee, origination fee, credit report, if not paid in advance)
- Prepaid interest
- Inspection fees (if not previously paid)
- Appraisal (if not previously paid)
- Mortgage insurance (if required, typically 1 years premium plus an escrow of 2 months)
- Property Hazard insurance (typically 1 years premium plus an escrow of 2 months)
- Title insurance, as required by lender or if desired, by cash buyer (50%, Seller pays 50%, as customary in the sale of Oahu real estate)
- Escrow fee (40%, Seller pays 60%, as customary in the sale of Oahu real estate)
- Documentary stamps on the note
If a Buyer has a VA loan certain types of fees may not be paid by the Buyer and are covered as part of the lenders fees. Please consult with your lender for specifics or see the following site for details.
SELLER CLOSING COSTS ON OAHU
The main closing cost for a Seller of Oahu real estate is usually the mortgage loan payoff amount, if there is a mortgage on the property. There are also other costs which may include:
- Mortgage liens, second mortgages/lines of credit & fees
- Other liens, e.g., mechanics lien, tax lien, etc.
- Seller’s Broker’s commission (includes portion paid by Seller’s broker to Buyer’s broker)
- Closing costs of Buyer (only if agreed to in the Purchase Contract, including sometimes, points on Buyers loan)
- Termite inspection fees (if not previously paid)
- Survey fee (if not previously paid)
- Documentary Stamps on the Deed
- Title insurance (50%, Buyer pays 50%)
- Escrow fee (60%, Buyer pays 40%)
- Property taxes (unpaid and prorated)
- Statutory conveyance taxes
- Estimate Your Closing Costs (courtesy of Title Guaranty Hawaii)
NEGOTIATION CLOSING COSTS
In addition to the sales price, Buyers and Sellers of Oahu real estate may include closing costs in their negotiations. Negotiations may be over any fee involved. For example, a Buyer can request a seller to pay a point on their mortgage and buy down their interest rate (SELLER BUY-DOWN). This often makes great sense because the Buyer can pay a bit more in the purchase price, rolling it into the mortgage, but get a credit back from the Seller to use toward the point, saving much more in interest in the long run.
Likewise, a Buyer may want to save on other up-front expenditures, and so agree to pay the Seller’s full asking price in return for the Seller paying all the allowable closing costs.* There’s no right or wrong way to negotiate closing costs; just be sure all the terms are written down on the Purchase Contract.
At the closing of an Oahu home, certain costs are often prorated (or distributed) between Buyer and Seller. The most common prorations are for mortgage payments or property taxes. Thus, if a house is sold on June 15, the Sellers will have already made the mortgage payment for June and should be credited back for the portion from June 15 on, when the Buyer is now living in the home.
*This varies with the type of loan.