Congratulations! You are in the final stretch! However, the joy of finalizing the real estate deal brings with it the stress of financial planning. Closing costs in Minnesota are a sum of expenses you should plan for when buying or selling a house.
- Closing costs or “settlement costs” are a set of final expenses paid for completing a real estate transaction.
- The seller and the buyer both pay closing costs in Minnesota.
- The 3 major Seller Closing Costs in Minnesota are:
- 1. REALTOR Fee
- 2. Recording Fee
- 3. Escrow Fee
- The 3 major Buyer Closing Costs in Minnesota are:
- 1. Loan Origination Fee
- 2. Escrow or Impound Account
- 3. Appraisal Fee
- In Minnesota, real estate transactions are usually closed by title companies or attorneys.
What are Closing Costs in Minnesota?
Closing costs in Minnesota are a sum of fees that have to be paid to different stakeholders. Closing costs are essential for finalizing the real estate deal and transferring ownership of the house. These settlement costs are paid in addition to the net property amount.
Who Pays Closing Costs in Minnesota?
Both the buyer and seller pay certain closing costs at the end of the real estate transaction in Minnesota.
The seller shells out a higher monetary amount as closing costs as they pay the REALTOR commission. Other fees, like documentation charges, transfer fees, etc., are paid by the buyer.
Some closing costs are negotiable, while others are non-negotiable, like taxes charged by your state or local jurisdiction.
Depending upon the market conditions of the current housing market in Minnesota, the buyer or the seller can negotiate their share of the closing costs. For example, in a buyer’s market, the seller may have to bear a portion of the buyer’s closing costs.
Who Pays Closing Costs on FSBO in Minnesota?
While For Sale By Owner (FSBO) property sellers do not have to pay heavy real estate agent commissions, they cannot completely escape closing costs. Some of these are:
1. Transfer Taxes
Transfer tax is charged by the state and/or municipality before the ownership is transferred from the seller to the buyer. In Minnesota, the transfer tax is levied by the county. All counties in Minnesota charge a transfer tax amounting to 0.33% of the property value.
2. Seller’s Attorney Fees
The law in Minnesota does not mandate the presence of an attorney for FSBO real estate transactions. However, it is highly advised to hire a real estate attorney for FSBO Minnesota deals to avoid any type of legal risk.
A real estate attorney guides the owner in preparing the necessary documents like the Minnesota residential real property disclosure and drafts of other legal paperwork.
» Free Websites to List For Sale By Owner: Check out the blog to know about the best FSBO websites in 2023.
3. Pre-listing Appraisal
FSBO sellers may have to invest in the pre-listing appraisal, as it would help them find an appropriate buyer in less time. This will, in turn, lower the number of days on the market and make the sale faster.
» Average Cost of Home Appraisal in Minnesota: Find out more about this Minnesota closing cost.
How Much are Closing Costs in Minnesota?
The closing cost in Minnesota for sellers is approximately 8%–10% of the home’s agreement value, while the buyers are expected to pay around 2%–5% of the home’s purchase price.
Let’s put this in perspective! The median home value in Minnesota is $334,482. So, if you are selling a house in Minnesota, you may have to pay $26,758- $33,448 as closing costs. On the other hand, if you are buying a house in Minnesota, your closing costs may range between $7,000 to $17,000.
How Much are Seller Closing Costs in MN?
As mentioned above, when selling real estate in Minnesota, you will have to pay some closing costs to transfer the house ownership to the buyer legally. These costs include several fees that need to be paid over and above the net price of the property.
Some seller closing costs are negotiable. Real estate agents in Minnesota usually have information about who pays what at closing and can help you save on closing costs.
Here are some of the prime seller closing costs in Minnesota.
1. REALTOR Fee MN
The seller pays real estate commissions to both the listing agent and the buyer’s agent. The real estate commission in Minnesota usually amounts to 5%-6% of the agreement value. Considering the typical home value in Minnesota, the seller may have to shell out $17,000 to $20,000 as a realtor commission in MN.
» How To Negotiate Real Estate Commission: Check out that blog to find out how to negotiate REALTOR commissions like a pro!
2. Recording Fee
The recording fee is paid by the seller to make the real estate transaction a matter of public record. the typical recording fee in MN is $60.
3. Escrow Fee
An escrow agent is an unbiased third party who helps you and the buyer complete the transaction. They clear the house for sale, transfer the ownership to the buyer, and the respective funds to the seller.
The escrow fee is the remuneration charged by the escrow agent for their services. Escrow firms in Minnesota usually charge 1% of the purchase price as a fee.
» Average Closing Costs in Minnesota for Seller: Here is a detailed breakdown of seller closing costs in Minnesota.
4. Home Inspection Fee
Sellers can opt for a home inspection to identify any major defects and issues, like plumbing issues, water damage, mold, appliance malfunction, etc., in the house that they must resolve before selling.
This can be done before the property is listed on the market (pre-inspection) or just before the closing. The cost of a home inspection in Minnesota usually ranges between $235-$350.
The buyer can also undertake a home inspection. However, if home inspectors in Minnesota find undisclosed defects, it might give them the upper hand during negotiations, or they may back out of the deal.
» What is the Average Cost of Home Inspection in Minnesota: Home inspection is an important part of a real estate transaction. Here’s what you need to know.
How Much are Closing Costs for Buyers in Minnesota?
These are the closing costs paid by the buyer while acquiring the property ownership from the seller. Like seller closing costs, these too are negotiable. Hence, hiring a buyer’s agent can help you save on closing costs.
We have listed some of the prime buyer closing costs.
1. Loan Origination Fees
Some mortgage lenders charge buyers a loan origination fee to execute the loan with other respective documentation and legal formalities. The loan origination fee in MN usually amounts to 0.5%-1% of the mortgage loan amount.
» Subprime Mortgage Lenders Minnesota: Here’s our pick of mortgage lenders in Minnesota you can choose from.
2. Mortgage Escrow Account/ Impound Account
A part of the buyer’s monthly mortgage payments is reserved in an escrow or impound account by the mortgage lender. This reserve is maintained to pay the property tax and homeowners insurance premiums.
A mortgage servicer manages the mortgage escrow account and makes the payments on behalf of the buyer.
3. Appraisal Fee
Appraisal fees are paid to the Minnesota real estate appraiser who assesses the home value and ensures you get the best competitive price.
The cost for home appraisal in Minnesota varies between $315 and $420, depending on the property characteristics like its actual saleable area and its geographical location.
» How Much are Closing Costs for Buyers in Minnesota: Here is a breakdown of Minnesota closing costs for buyers.
4. Title Insurance
A title company offers a title policy in MN to protect the insured against any type of loss with respect to any outstanding taxes, unpaid dues, default in the title, or any violations. Title insurance premiums in Minnesota could cost 0.5%-1% of the purchase price.
» How Much Does Owner’s Title Insurance Cost in Minnesota: Protect your real estate investment with owners’ title insurance. Learn more.
5. Land Survey Fee
A land survey gives the buyer a better idea of the property they are buying in a legal and official capacity. The average cost of a land survey in MN is $500.
» How Much are Closing Costs in MN for Buyer: Find out the details of ALL the typical closing costs in MN for buyers.
How are Closing Costs Calculated?
It is important to calculate closing costs while selling a house or buying one.
The estimated closing costs give sellers an idea about the home equity they will have after the sale and helps buyers find out the amount they will have to pay over and above the agreement value of the house.
» Closing Cost Calculator: Check out the closing costs calculator for calculating the closing costs for your real estate transaction.
How to Calculate Closing Costs for Seller?
Houzeo’s Home Sale Calculator helps calculate closing costs for sellers in Minnesota with a swish and a click! All the sellers have to do is enter their property location, home sale price, mortgage payoff, seller agent commission, and buyer agent commission, and voila!
The Seller Closing Cost Calculator MN even gives sellers an estimate of their home inspection fee and home warranty fee. With the help of this home sale proceeds calculator, sellers can find out their home equity and be prepared for closing.
» Seller Closing Cost Calculator Minnesota: Check out the seller closing costs calculator for calculating the closing costs for the seller.
How to Calculate Closing Costs for Buyers?
Houzeo’s Buyer Closing Cost Calculator helps calculate closing costs for buyers in Minnesota. To find the estimated buyer closing costs, the buyers have to add the property location, home purchase price, and the down payment in the buyer closing cost estimator.
The closing cost calculator for buyers gives a detailed list of the buyer’s estimated closing costs.
Home buyers can find out everything right from origination fees, appraisal fees, and survey fee to title search, attorney fees, recording fees, prepaid interest charges, escrow property taxes, and owner’s title insurance.
The Buyers Closing Cost Calculator MN even shows which fees have to be paid before closing and which ones have to be paid at closing.
» Closing Cost Calculator for Buyer Minnesota: Check out the closing costs calculator for a buyer for calculating the closing costs for a buyer.
Closing Costs in Minnesota for Refinance
Before we dive into closing costs for refinance, let’s look at the term refinance:
What is Refinancing?
Refinance, also called “Refi,” is nothing but replacing your current loan with one that offers a lower rate of interest. This helps lower monthly mortgage payments.
How Much are Closing Costs in Minnesota for Refinance?
Refinancing closing costs are the sum of several expenses paid against any services that were used in the process of underwriting and closing on your mortgage loan, which makes up 3%-5% of the mortgage amount.
The closing cost for refinancing would vary with respect to the property’s location.
Junk Closing Costs to Watch Out For
Junk costs are the additional costs that are imposed by the mortgage lender. These are usually excessive but can be challenged and negotiated for a fairer price. Some of these are:
- Application Fee: The buyer pays this fee to the lender when applying for the mortgage. Not all lenders charge an application fee.
- Loan Processing Fee: This fee is charged by the lender to execute the loan once it has been approved. Borrowers can negotiate for these charges to be waived.
- Mortgage Rate Lock Fee: This fee is a guarantee that the lender will honor the pre-agreed interest rate for a said amount for a set period.
- Underwriting Fee: Mortgage underwriters charge an underwriting fee to evaluate and verify loan applications. It is a non-recurring fee. Some lenders charge it in place of the originating fee, while others charge it in addition to the same.
- Courier Fee: A fee of $20-$50 is typically charged in order to cover the courier transactions.
Note: The costs vary by region.
The closing cost in Minnesota is the mandatory fee that needs to be paid by the seller & the buyer. This is paid over and above the mortgage loan amount. Where the buyer pays 2%-5% and the seller pays 6%-10% against their share of the closing cost.
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Houzeo’s customer-centric approach, advanced technology, and flat fee packages make it an ideal choice for those looking to avoid paying high commissions and closing costs.
» Houzeo Reviews: Check out Houzeo.com’s reviews before listing your house!
Frequently Asked Questions
1. How much are closing costs in Minnesota?
The closing cost in Minnesota for buyers is approximately 2%–5% of the home’s agreement value. While the sellers are expected to pay around 6–10% of the home’s purchase price, including the realtor fee.
2. How much are closing costs in Minnesota for buyer?
The buyer closing costs are the charges paid by the buyer while acquiring the property ownership from the seller. These charges included several fees that need to be paid over and above the agreement amount and are negotiable too. Hence, you would need the best listing agent that would benefit you in this deal.
3. How much are closing costs in Minnesota for seller?
The seller closing costs are the charges paid by the seller while transferring the property ownership to the buyer. These charges included several fees that need to be paid over and above the agreed amount and are negotiable too. Hence, you would need the best listing agent that would benefit you in this deal.
4. Who pays realtor fees in Minnesota?
It is customary for the seller to pay realtor fees to both the seller's agent and the buyer's agent in MN.
- Who Pays Closing Cost in Minnesota: Closing costs vary according to the type of real estate deal. Find out which closing costs you’ll have to pay in Minnesota.
- Flat Fee MLS in Minnesota: You can save a significant amount in closing costs in Minnesota by listing your house on the MLS for a flat fee.
- Real Estate Purchase Agreement Minnesota: Check out how to create a contract for an FSBO transaction.
- How to Stop Foreclosure in Minnesota: Read the blog to know how to stop foreclosure in Minnesota.
- Who Pays for Lender’s Title Insurance in Minnesota: If you are taking a mortgage to buy a house, you will most likely have to purchase a lender’s title insurance.
- Selling a Home AS IS in Minnesota: Check out how you can sell your house as is in Minnesota.
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