By Rick Cox Realty Group
The offer is accepted, the inspection is done, and the closing date is on the calendar. Now comes the part many first-time buyers ask us about: what will it cost to close? Closing costs are easy to plan for once you know what they include. Here is a straightforward look at the main pieces, so you can walk into settlement knowing what to expect.
Key Takeaways
- Closing costs for a Virginia home are the fees and taxes due at settlement, on top of your down payment.
- Buyers typically pay for lender fees, the appraisal, title insurance, settlement services, recordation tax, and prepaid items.
- Virginia's grantor's tax is a seller cost, and your contract decides who pays other items.
- Your lender's Loan Estimate gives you a clear picture of costs early, so you can plan ahead.
What Closing Costs Are
Closing costs cover the services and taxes needed to complete your purchase and transfer the home to you. They are separate from your down payment, and you pay them at settlement. In Virginia, a title company or attorney usually handles the closing and prepares a settlement statement that lists every charge.
The contract controls who pays what, so costs can shift from one deal to the next. The best way to get a clear picture is to talk with your lender and your agent early in the process.
Where Closing Costs Come From
- Fees from your lender for arranging the loan
- Services like the appraisal and title work
- Taxes and recording fees due to the state and locality
- Prepaid items that start your homeownership
- Credits or adjustments between buyer and seller
Lender and Loan Costs
If you are financing your purchase, your lender charges fees for processing and underwriting the loan. The lender also orders an appraisal to confirm the home's value, and buyers customarily pay for it. The exact charges depend on your loan and your lender.
You will receive a Loan Estimate soon after you apply. It lists the expected loan costs and is one of the most useful tools for planning, so review it closely and ask questions.
Items You May See From the Lender
- Loan origination or processing fees
- The appraisal fee
- Credit report charges
- Points, if you choose to buy down your rate
- Other lender-required services
Title and Settlement Costs
Title services protect your ownership. A title search checks the property's history, and title insurance protects you against certain claims. In most Virginia contracts, the buyer pays for title insurance. You will also pay a settlement or closing fee to the company or attorney who handles the closing.
These costs are a small part of the process, but they provide important protection. You can often ask your agent about title companies that work in the Richmond, Midlothian, and Chesterfield area.
What Title and Settlement Cover
- A title search of the property's records
- Title insurance for the lender and, often, the owner
- The settlement or closing fee
- Document preparation and recording services
- Wire and courier fees, in some cases
Virginia Taxes and Recording Fees
Virginia has a state recordation tax on the deed, and some localities add their own. If you have a loan, there is also a recordation tax on the deed of trust. Buyers generally pay these charges.
Virginia also has a grantor's tax, which is a transfer tax. This one customarily falls on the seller, not the buyer. Your settlement statement will show each tax, so you can see where the money goes.
Taxes to Know About
- State recordation tax on the deed
- Local recordation taxes, where they apply
- Recordation tax on the deed of trust for financed purchases
- Grantor's tax, which the seller customarily pays
- Property tax adjustments between buyer and seller
Prepaid Items and Escrow
Some closing costs are paid in advance. Lenders typically ask you to prepay the first year of homeowner's insurance and a few months of property taxes to start an escrow account. You may also pay prepaid interest from closing day through the end of the month.
These are not extra fees. They are your own housing costs paid ahead of time, and the escrow account helps cover future tax and insurance bills. Property taxes are also split between buyer and seller as of the closing date, and your share appears on the settlement statement.
Prepaid Items to Plan For
- The first year of homeowner's insurance
- A few months of property taxes for escrow
- Prepaid interest on your loan
- Homeowners association fees or transfer charges, where they apply
- Utility set-up and moving costs, which sit outside closing but are worth budgeting
Ways to Plan and Manage Your Costs
Good planning keeps the closing day calm. Ask your lender for a Loan Estimate early, compare it with the Closing Disclosure you receive before settlement, and ask about anything that looks different. Shopping for services like title insurance can also help, since some fees are flexible.
In some cases, sellers agree to help with part of a buyer's costs. Limits depend on the loan program, so talk with your agent and lender about whether it fits your situation.
Planning Steps That Help
- Request a Loan Estimate early in your search
- Review your Closing Disclosure as soon as you receive it
- Ask your lender and agent which fees can be shopped
- Discuss seller contributions with your agent
- Keep your finances steady until you close
FAQ
What are typical closing costs for a Virginia home?
Costs vary based on the price, loan, and locality. They usually include lender fees, the appraisal, title insurance, settlement services, recordation tax, and prepaid items. Your lender can give you an estimate for your situation.
Who pays the grantor's tax in Virginia?
The seller customarily pays it. Your contract can change who pays certain items, so check it with your agent.
Can I ask the seller to help with closing costs?
Yes, buyers sometimes request seller contributions. The amount allowed depends on your loan program, so talk with your agent and lender before you write your offer.
Plan Your Closing With Rick Cox Realty Group
If you are ready to plan closing costs for a Virginia home, Rick Cox Realty Group is here to help. Our team works with buyers and sellers across Richmond, Midlothian, and Chesterfield, and we can walk you through each step from offer to settlement.
Meet the team that will be at your side on our team page, and tell us where you are in your home search.
