Closing Costs in Indiana: What to Expect When You Buy a Home in 2024

Closing costs are the fees charged to both the buyer and seller to finalise the sale of a home. In Indiana, buyers can expect to pay approximately 2%-5% of the purchased home’s value in closing costs, while sellers typically pay around 6%-10% of the sale price including realtor commissions. For example, on a $251,178 home in Indiana, the buyer would owe between $5,023–$12,558 in total closing fees, which represents the 2%-5% range.

Key Takeaway

  • Closing costs range 2%-5% for buyers, 6%-10% for sellers.
  • Major costs include title fees, lender fees, transfer taxes.
  • Factors like sale price, loans, negotiations impact totals.
  • Shop around, negotiate to lower some closing fees.
  • Knowledgeable agents explain costs, find savings.

What are Closing Costs in Indiana

Closing costs in Indiana refer to the various administrative fees required to complete a real estate transaction. Both buyers and sellers will have closing costs they are responsible for paying. However, closing costs in Indiana vary depending on whether you are buying or selling a home, but here’s a general breakdown:

For Buyers

  • Average: 2% to 5% of the purchase price.
  • Typical range: $4,543 to $11,358 based on the median home value of $227,165.
  • Includes:
    • Loan origination fees
    • Underwriting fees
    • Appraisal fees
    • Title search and insurance
    • Recording fees
    • Prorated property taxes and homeowner’s insurance
    • Loan-specific costs like PMI, FHA mortgage insurance, VA funding fees, etc.

For Sellers

  • Average: 6% to 10% of the sale price, including realtor commission.
  • Without realtor commission: 2.81% of the sale price.
  • Typical range (excluding commission): $6,412 based on the median home value.
  • Includes:
    • Title and closing service fees
    • Owner’s title insurance
    • Real estate transfer tax (not applicable in Indiana)
    • Recording fees
    • Prorated property taxes and HOA fees
    • Optional costs like buyer incentives and attorney fees

Also read: Closing Costs for Buyers in Florida: Total Calculation

Different Types of Closing Costs

Closing costs encompass various fees and charges associated with finalizing a real estate transaction, typically paid at the closing table. These costs are beyond the purchase price of the property and can be categorized into several main types:

1. Loan-related fees

  • Origination fee: A charge by the lender for processing your loan application.
  • Underwriting fee: Covers the cost of assessing your financial situation and creditworthiness to determine the loan risk.
  • Processing fee: Covers the administrative costs of processing your loan documents.
  • Discount points: Optional prepaid interest that can lower your interest rate.
  • Loan-specific fees: These may include private mortgage insurance (PMI) for conventional loans with low down payments, FHA mortgage insurance for FHA loans, or VA funding fees for VA loans.

2. Title fees

  • Title search: This fee covers researching the property’s history to ensure there are no outstanding liens or ownership claims.
  • Title insurance: Protects the lender and buyer from financial loss if any issues arise with the property’s title after closing.
  • Closing fee: Charged by the title company for handling the closing process and paperwork.

3. Government fees

  • Recording fees: Paid to the government to register the transfer of ownership in public records.
  • Transfer taxes: Some states or localities impose a tax on the sale of real estate, although this is not applicable in Indiana.

4. Pre-paids and escrow

  • Prorated property taxes: Covers the portion of property taxes owed by the seller from the closing date to the end of the tax year.
  • Prorated homeowner’s insurance: Covers the portion of homeowner’s insurance owed by the seller from the closing date to the end of the policy period.

5. Other closing costs

  • Appraisal fee: Covers the cost of an independent professional to assess the property’s value.
  • Attorney fees: Optional, but some states require an attorney to be present at closing.
  • Credit report fee: Covers the cost of obtaining your credit report.
  • Courier fees: For overnight delivery of documents.
  • Home inspection fees: Optional, but highly recommended to identify any potential problems with the property.
  • HOA transfer fees: Applicable if the property is located in a community with a homeowner’s association.

It’s important to note that the specific closing costs you encounter will vary depending on several factors, including:

  • Location: Different states and localities may have different fees and regulations.
  • Loan type: Different loan programs may have specific associated fees.
  • Negotiation: Some closing costs, like seller concessions, can be negotiated between buyer and seller.

It’s crucial to carefully review the Loan Estimate (LE) and Good Faith Estimate (GFE) provided by your lender, which will detail the estimated closing costs associated with your specific loan scenario. This allows you to budget effectively and potentially negotiate with various service providers to potentially reduce your overall closing costs.

Also read: The Pros and Cons of Accepting a Cash Offer for Your Home

Factors Influencing Closing Costs in Indiana

Several key factors determine the closing costs for a home sale in Indiana:

  • Sale Price – The purchase price of the home directly impacts fees based on a percentage, such as transfer taxes and title insurance. Higher home values mean higher closing costs.
  • Loan Type – Government-backed FHA and VA loans often have lower closing costs than conventional mortgages. The loan program impacts origination fees.
  • Down Payment – Lower down payments often incur higher loan fees from lenders. A 20% down payment avoids private mortgage insurance.
  • Financing – Cash purchases avoid lender fees but still incur title/ownership transfer costs. Seller-financed deals have lower closing costs too.
  • Title Company – Title fees can vary between companies, so shopping around helps. Attorneys also handle title transfers.
  • Taxes and Insurance – Prepaid property taxes and home insurance premiums are common charges.
  • Negotiations – Buyers may negotiate with sellers to lower costs like owner’s title insurance.

Who Pays Closing Costs in Indiana

In Indiana, the buyer typically pays around 2-5% of the purchase price for closing costs while the seller pays around 6%-10% of the sale price. However, the purchase agreement dictates who pays which fees.

Buyers often pay

  • Loan origination/underwriting
  • Credit reports
  • Appraisals
  • Home inspections
  • Lender’s title insurance
  • Prepaid property taxes
  • Initial home insurance premium

Sellers often pay

  • Agent commissions
  • Document preparation
  • Recording fees
  • Transfer taxes
  • Any unpaid taxes
  • Title search
  • Owner’s title insurance
  • Legal fees

Costs may be split in some cases, like title insurance and transfer taxes. But the contract terms can modify traditional norms too.

In For-Sale-By-Owner deals, the seller pays all typical closing costs.

Also read: Cost to Build a House in Indiana: Complete Guide

Who Pays Closing Costs on FSBO in Indiana

In an FSBO (For Sale By Owner) transaction in Indiana, closing costs are typically divided:

  • Buyer: Pays most costs like loan fees, title fees, government fees, and pre-paids.
  • Seller: Still responsible for seller agent commission (if offered), title and closing fees, recording fees, and their share of pre-paids.

How Much are Closing Costs in Indiana

For a median-priced home in Indiana, buyers pay average closing costs of $5,023, while sellers pay $10,343. Here is the full breakdown:

For Buyers

Closing CostAvg. Cost
Loan Origination$1,875
Appraisal$450
Credit Check$50
Title Insurance$728
Title Search$75
Sale Commission$1,250
Recording Fee$123
Home Inspection$351
Total$5,023

For Sellers

Closing CostAvg. Cost
Agent Commission$7,558
Title Insurance$728
Recording Fee$123
Transfer Tax$434
Document Fees$500
Outstanding Property Taxes$1,000
Total$10,343

As shown above, realtor commissions claim the biggest share of closing fees in Indiana for both buyers and sellers. Title-related charges are also a significant expense.

How Much are Closing Costs in Indiana for Different Home Prices

Closing costs in Indiana vary depending on several factors, including:

  • Whether you are buying or selling: Sellers typically pay more in closing costs than buyers.
  • The purchase price of the home: Closing costs are often a percentage of the home’s price.
  • The type of loan you choose: Different loan types have different associated fees.
  • Negotiations with the seller: You may be able to negotiate with the seller to cover some of your closing costs.
  • Location and specific service providers: Fees can vary slightly depending on the county and the companies you choose for certain services.

Here’s a breakdown of estimated closing costs for different home prices in Indiana:

Home PriceEstimated Buyer Closing Costs (2-5%)Estimated Seller Closing Costs (6-10%)
$100,000$2,000 – $5,000$6,000 – $10,000
$200,000$4,000 – $10,000$12,000 – $20,000
$300,000$6,000 – $15,000$18,000 – $30,000
$400,000$8,000 – $20,000$24,000 – $40,000

Lowering your closing costs in Indiana

If your closing costs seem high in Indiana, some tips can potentially lower your fees:

  • Shop around with multiple lenders and title companies
  • Ask if any terms are negotiable – some title or lending fees have flexibility
  • Pay discount points for a lower interest rate to reduce overall loan costs
  • See if the seller can pay any points or fees through negotiation
  • Apply for grant programs like down payment assistance to offset loan charges
  • Get quotes from lower-cost attorneys as an alternative for title work
  • Opt for seller financing terms to avoid third-party mortgage fees

While you can’t eliminate closing costs, shopping smart can yield significant savings in Indiana.

How to Avoid Paying Closing Costs When Buying a House?

  • Minimize: Negotiate with lenders and sellers to reduce fees.
  • Roll into mortgage: Finance closing costs into your loan (increases long-term cost).
  • Explore programs: Utilize government assistance or lender programs for first-time buyers.
  • Consider seller credit: Negotiate for the seller to cover some closing costs.
  • Shop around: Compare lenders and service providers for better rates.
  • Strategic closing: Close at month’s end to minimize interest accrual.
  • FSBO: Consider buying directly from the seller (For Sale By Owner).
  • Rebate programs: Look for lenders offering closing cost rebates.
  • FHA loans: Explore FHA loans with lower down payments and closing cost flexibility.

How are Closing Costs Calculated

Closing costs are typically calculated as a percentage of the loan amount, usually ranging from 2% to 6%. They can also include various fees charged by the lender, broker, and other third parties involved in the transaction, such as appraisal fees, attorney fees, and title insurance.

It’s important to note that closing costs can vary depending on several factors, such as your location, the type of loan you choose, and the complexity of your transaction. To get a more accurate estimate of your closing costs, you can use a closing cost calculator or speak with a lender.

How to Find a Trusted Real Estate Agent

Finding a reliable real estate agent in Indiana is key to ensuring your home sale or purchase goes smoothly. Tips for finding a good agent include:

  • Get referrals – Ask neighbors, friends, co-workers for recommendations of top agents.
  • Search online reviews – Look for pros that have consistently positive customer feedback.
  • Interview several agents – Ask questions on experience, services, fees, etc to find the best fit.
  • Check credentials & ratings – Verify agents have proper licensing & high industry ratings.
  • Understand your needs – An ideal agent matches strengths to your transaction.

The best Indiana real estate agents save home buyers and sellers time and money throughout the closing process. Taking time to research and choose the right pro pays dividends.

Conclusion

Understanding closing fees involved with buying or selling a property in Indiana helps set proper expectations. While closing costs vary, buyers typically owe around 2-5% and sellers 6-10% of the home’s value to finalize transactions.

Shopping around for rates, negotiating credits, and asking for lender/seller contributions can help lower total fees at closing. But budgets several thousand dollars for these required processes to transfer home ownership in most real estate deals.

Frequently Asked Questions (FAQ)

How much are closing costs for a seller in Indiana?

Expect to pay around 2.81% of the sale price, but this can vary. Realtor commissions, typically 5%-6%, are often the biggest expense. 

 Who typically pays more closing costs, buyers or sellers?

Generally, sellers pay more in closing costs, including realtor commissions, which can range from 5% to 6% of the sale price.

Which state has the highest average closing costs?

Determining the state with the absolute highest cost is difficult due to variations within different regions. However, some states consistently rank higher, like Hawaii and New York.

What are closing costs in Indiana?

Closing costs in Indiana refer to the administrative fees charged to both buyers and sellers to finalize a real estate transaction. Closing costs usually total 2-5% of the home price for buyers, and 6-10% including commissions for sellers.

What are the typical closing costs for Indiana home buyers?

Indiana home buyers generally pay around 2-5% of the purchase price in closing fees. For a $300,000 home, closing costs would range from $6,000-$15,000 in most cases. The main closing costs are lender fees, title insurance, transfer taxes, and more.

What closing costs do Indiana home sellers pay?

The main closing costs for Indiana home sellers are the real estate agent commission fees, which are typically around 5-6% of the sale price. Other seller closing fees include transfer taxes, attorney fees, title fees, and so forth. Total seller costs are about 6-10% of the home price.

Who pays the title fees in an Indiana real estate transaction?

The seller typically pays for providing the title search and existing title insurance policy. Then the buyer pays for the new lender’s title insurance policy and endorsements. However, the buyer and seller can negotiate splitting the title insurance costs in either direction.

Is there any way for a buyer to avoid closing costs in Indiana?

Buyers in Indiana may be able to reduce or eliminate closing costs by negotiating a seller contribution, applying for down payment assistance programs, or taking a higher mortgage interest rate in exchange for lender credits to help cover fees.

Jean Folger

Jean Folger brings over 15 years of expertise as a financial writer, specializing in areas such as real estate, investment, active trading, retirement planning, and expatriate living. She is also the co-founder of PowerZone Trading, a firm established in 2004 that offers programming, consulting, and strategy development services to active traders and investors.

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