When it comes to purchasing a home in Kentucky, it’s important to factor in more than just the price of the property. Closing costs are additional expenses that need to be considered before finalizing a real estate transaction. These costs can include taxes, lender fees, and title insurance.
In this informative article from Redfin, we will delve into the average closing costs in Kentucky, who typically covers these costs, and what buyers and sellers can expect to pay. From lender fees to insurance expenses, we will provide you with essential information to help you budget effectively and navigate the home-buying process smoothly.
How much are closing costs on average in Kentucky?
Aside from the down payment, homebuyers in Kentucky should be prepared to pay closing costs before officially owning their new home. On average, closing costs in Kentucky typically range from 2% to 5% of the purchase price of the home. However, it’s important to note that this is just an estimate, and the actual amount can vary based on factors such as the home’s purchase price, loan type, and any negotiated adjustments with the seller.
For instance, if you are buying a home in Lexington with a median sale price of $329,475, closing costs could fall between $6,590 and $16,474. Similarly, purchasing a home in Louisville with a median sale price of $267,000 could result in closing costs ranging from $5,340 to $13,350.
Who pays closing costs in Kentucky?
In most real estate transactions in Kentucky, both the buyer and seller are responsible for covering closing costs. However, the specific amount that each party pays can vary depending on the agreement. Typically, buyers pay their closing costs upfront, while sellers have their costs deducted from the proceeds of the home sale.
Buyer closing costs in Kentucky
For homebuyers in Kentucky, the closing costs usually range from 2% to 5% of the purchase price. If you have already paid earnest money, this amount will be subtracted from your total closing costs. Earnest money typically amounts to 1% to 3% of the home’s price. Here are some common closing costs that buyers may encounter:
- Appraisal fee: Typically ranging from $300 to $500, home appraisals may need to be paid for separately or at closing.
- Inspection fee: Home inspections, which can cost between $300 and $500, may also be paid at closing.
- Loan origination fee: Lenders may charge a fee for creating your loan, so it’s important to understand this cost and its negotiability.
- Loan processing fee: Another potential fee from lenders covering underwriting and related services.
- Loan discount points: If you purchased points to lower your interest rate, a one-time fee may be required at closing.
- Private mortgage insurance (PMI): Typically necessary for down payments under 20%, PMI can be paid upfront at closing.
- Title insurance: A one-time cost that buyers commonly cover for both lender and owner policies.
- Homeowners insurance: Annual premiums may be included in the closing costs for Kentucky buyers.
- Homeowners Association dues: If applicable, one month’s dues may be paid at closing for HOA-managed properties.
- Property taxes: Prepayment of a portion of property taxes may be required at closing.
Seller closing costs in Kentucky
Sellers in Kentucky may be responsible for various closing costs, including:
- Real estate agent commission fees: A significant cost that sellers should discuss with their agent.
- Homeowners Association fees: Potential fees related to HOA membership, transfer, and outstanding dues.
- Property taxes: Sellers must cover any accrued property taxes up to the closing date.
- Title insurance: Sellers typically pay for the buyer’s owner’s title insurance policy.
- Transfer taxes: State levied real estate transfer taxes based on the property’s sale price.
Median home sale price data sourced from the Redfin Data Center in July 2024.