Understanding Closing Costs in Mississippi

What Are Closing Costs?

Closing costs are the fees associated with completing your real estate transaction. Most closing costs are related to obtaining a mortgage loan, although every transaction is different.

Closing costs are separate from your down payment. Even buyers making a substantial down payment should plan for closing costs and pre-paid items unless those expenses are negotiated to be paid by the seller.

If the buyer is responsible for paying the closing costs, those costs are due at closing. Buyers typically bring a cashier’s check or wire the required funds before closing, whether they are purchasing with cash or financing the home.

If the seller agrees to pay some or all of the buyer’s closing costs, those amounts are deducted from the seller’s proceeds at closing.

Understanding closing costs today helps make walking through your new front door tomorrow a little easier.

What Do Closing Costs Include?

While every transaction is unique, closing costs commonly include:

• Lender fees
• Attorney fees for title work and closing
• Title insurance
• Recording fees
• Appraisal fees
• Credit report fees
• Other miscellaneous fees associated with the transaction

Your lender will provide you with a detailed Loan Estimate and Closing Disclosure outlining the specific costs associated with your loan.

What Are Pre-Paid Items?

Many buyers hear the term pre-paid items during the home-buying process.

Pre-paid items are not fees for the transaction itself. Instead, they are funds collected at closing to establish your escrow account and prepare for future homeownership expenses.

These may include:

• Homeowners insurance premiums
• Property taxes collected in advance
• Other escrow deposits required by your lender

Because these expenses are collected at closing, buyers often refer to the combined total of closing costs and pre-paid items simply as “closing costs.”

How Much Are Closing Costs?

Closing costs and pre-paid items often total several thousand dollars, although the exact amount varies depending on factors such as purchase price, type of loan, lender fees, property taxes, homeowners insurance premiums, and other transaction-specific expenses.

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Who Pays the Closing Costs?

One of the most common questions buyers ask is, “Who pays the closing costs?”

In Mississippi, there is no law or standard practice assigning specific closing costs to either the buyer or the seller. Nearly all closing costs and pre-paid items are negotiable as part of the purchase contract.

During negotiations, buyers may ask the seller to contribute toward these expenses. Whether the seller agrees depends on many factors, including market conditions, the strength of the offer, and the seller’s individual circumstances.

An experienced REALTOR® can help you understand your options and negotiate terms that best fit your situation.

Are REALTOR® Fees Included in Closing Costs?

No. REALTOR® compensation is separate from closing costs and pre-paid items. Compensation is paid according to the agreements between the parties and reflected in the purchase contract.

What If I’m Paying Cash?

If you are purchasing a home without financing, your closing costs are typically much lower because many lender-related fees do not apply.

While every transaction is different, cash buyers often have closing costs of less than $1,000.

Planning Ahead

Closing costs are an important part of purchasing a home and should be considered when comparing mortgage lenders, planning your home-buying budget, deciding how much to offer on a property, and negotiating the terms of your purchase contract.

Knowing what to expect before closing helps you make informed decisions throughout the buying process and prevents last-minute surprises.