Closing Costs in Missouri: Complete Guide for 2024

Buying or selling a home in Missouri, like most states, requires paying closing costs to finalise the real estate transaction. Closing costs in Missouri range from 2%-5% of the purchase price for buyers, and 6%-10% for sellers (including real estate commissions). While closing costs can’t be avoided, understanding what they include and planning ahead can help buyers and sellers manage these inevitable fees.

Key Takeaways

  • Closing costs include fees for services like title insurance, recording, credit checks and more.
  • Buyers typically pay 2%-5% of the purchase price.
  • Sellers often pay 6%-10%, including the real estate commission.
  • Closing costs can’t be avoided but can be reduced.
  • Shopping around for title and escrow services can save money.
  • Asking for seller concessions during negotiations also helps.

What are Closing Costs in Missouri

Closing costs refer to the expenses required to complete the real estate transaction and transfer ownership of the property. Both buyers and sellers will incur closing fees. The costs cover services like:

  • Title searches – Verifying ownership and checking for liens.
  • Appraisals – Third-party valuations of the property.
  • Credit checks – For buyers applying for financing.
  • Taxes and insurance – Prorated amounts due at closing.
  • Recording fees – To register the deed with the county.
  • Attorney fees – If one is utilized during the transaction.

Virtually all home purchases in Missouri will incur closing costs. Even all-cash deals have expenses related to title work and deed recording.

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

Different Types of Closing Costs

  • Loan-related fees:
    • Origination fee
    • Underwriting fee
    • Discount points
    • Appraisal fee
    • Processing fee
  • Title and escrow fees:
    • Title search fee
    • Title insurance
    • Escrow fee
    • Recording fees
  • Government charges and taxes:
    • Prorated property taxes
    • Transfer taxes
    • Recording fees
  • Other potential costs:
    • Attorney fees
    • Home inspection fee
    • Homeowners insurance premium
    • HOA fees

Factors Influencing Closing Costs in Missouri

Several things impact the amount of closing fees on a Missouri home purchase, including:

  • Home price – Higher prices equal higher fees.
  • Down payment – Less financing can mean lower loan fees.
  • Lender – Each charges different origination/points.
  • Credit scores – Lower scores may incur higher loan rates/points.
  • Title company – Shop around as fees can vary drastically.
  • Other negotiations – Such as seller credits (see below).

Understanding these key influences can help in estimating and managing closing costs.

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

Who Pays Closing Costs in Missouri

In Missouri, it is customary for home buyers to pay approximately 2%-5% of the purchase price in closing costs. Sellers traditionally cover roughly 6%-10% of the home price. The seller’s side includes the commission for their real estate agent, which accounts for the larger percentage.

There are some fees that are shared between buyers and sellers, including:

  • Prorated property taxes and HOA fees
  • Recording fees for the deed
  • Other title charges

But most closing expenses are attributed to either the buyer or seller specifically.

Who Pays Closing Costs on FSBO in Missouri

In a For Sale By Owner (FSBO) transaction in Missouri, both the buyer and seller are responsible for paying closing costs, similar to traditional transactions with realtors. However, the specific costs each party bears can be negotiated.

Here’s a breakdown of typical closing cost responsibilities:

Seller

  • Real estate agent commission (if applicable): While you’re selling FSBO, the buyer might still use an agent. In this case, you may be responsible for their commission, typically around 3% of the sale price.
  • Recording fees: These fees cover the cost of registering the deed transfer with the county.
  • Title search and insurance: These ensure the property’s ownership is clear and protect against potential claims.
  • Escrow fees: These cover the costs associated with holding funds securely until closing.
  • Pro-rated property taxes: You’ll be responsible for any property taxes owed up to the closing date.
  • Other potential costs: Depending on the agreement, you might be responsible for homeowner association (HOA) fees, transfer taxes, or other miscellaneous fees.

Buyer

  • Loan origination fees: These cover the lender’s processing costs for your mortgage.
  • Appraisal fee: This covers the cost of an independent professional valuing the property.
  • Title search and insurance: Similar to the seller, the buyer typically pays for their own title search and insurance.
  • Escrow fees: The buyer might also contribute to escrow fees depending on the agreement.
  • Other potential costs: Depending on the agreement, the buyer might be responsible for things like inspections, lender’s title insurance, and recording fees.

Negotiation is key:

While these are typical breakdowns, it’s crucial to remember that closing costs are negotiable in FSBO transactions. Both parties can discuss and agree on who pays for specific fees. It’s recommended to:

  • Consult with a real estate attorney: They can advise you on standard practices, draft contracts, and ensure a smooth closing process.
  • Clearly outline responsibilities in the purchase agreement: This document should explicitly state who is responsible for each closing cost.

By understanding typical responsibilities and engaging in open communication, you can ensure a fair and transparent closing process in your FSBO transaction.

How Much are Closing Costs in Missouri

As a ballpark figure, closing costs in Missouri range from 2%-5% for buyers and 6%-10% for sellers. But the precise amount will depend on the home price and other factors.

Here are the approximate closing costs in Missouri for different home prices:

Home PriceBuyer Closing CostsSeller Closing Costs
$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
$500,000$10,000-$25,000$30,000-$50,000
$750,000$15,000-$37,500$45,000-$75,000
$1 million$20,000-$50,000$60,000-$100,000

As shown above, closing fees directly correlate to sale prices. And seller costs tend to be double or triple that of buyers.

How are Closing Costs Calculated

Calculating closing costs isn’t a simple formula, but rather involves adding up various fees and charges from different categories. These categories include loan-related fees (originations, underwriting, etc.), title and escrow fees (title search, insurance, etc.), government charges and taxes (property taxes, transfer taxes, etc.), and other potential costs (inspections, attorney fees, etc.).

The exact amount for each fee depends on factors like your loan type, property value, lender, and even your location within Missouri. While averages exist (around 2%-5% for buyers and 6%-10% for sellers), the true cost can vary significantly.

To get a precise picture, it’s crucial to obtain a Loan Estimate (LE) from your lender. This document provides an itemized breakdown of estimated closing costs, helping you budget effectively and make informed decisions throughout the real estate transaction.

Steps to Prepare for Closing

Here are the key steps to prepare for closing, whether you’re buying or selling a property:

Before Closing

  • Review and understand your loan documents: Carefully review the loan estimate and closing disclosure provided by your lender. Ensure all information, including loan terms, interest rates, and closing costs, are accurate and match your initial agreement.
  • Schedule a final walkthrough: This inspection, typically done a few days before closing, allows you to verify the property’s condition aligns with the purchase agreement. Check for any discrepancies or damages that need addressing.
  • Gather required documents: Prepare all documents requested by your lender or closing agent, such as proof of identification, homeowner’s insurance policy, proof of funds for closing costs, and tax returns.
  • Secure homeowner’s insurance: Choose and purchase a homeowner’s insurance policy that meets your lender’s requirements and provides adequate coverage for the property.
  • Arrange for closing funds: Ensure you have the necessary funds to cover closing costs, typically transferred via certified check or wire transfer. Confirm the exact amount and payment method with your closing agent.
  • Ask questions and clarify doubts: Don’t hesitate to reach out to your real estate agent, lender, or closing agent if you have any questions or require clarification regarding the closing process or documents.

On Closing Day

  • Arrive early: Plan to arrive at the closing location a few minutes before the scheduled time to avoid any delays.
  • Bring required documents: Ensure you have all the necessary documents organized and readily available for review and signing.
  • Review closing documents carefully: Take your time to thoroughly read and understand each document before signing. Ask questions if anything is unclear.
  • Sign and finalize the transaction: Once you’re comfortable with all the documents, proceed with signing and finalizing the transaction.
  • Receive keys and ownership: Upon successful completion of the closing process, you’ll receive the keys to the property and officially become the owner (for buyers) or receive the proceeds from the sale (for sellers).

Closing Costs in Missouri for Refinance

Closing costs for refinancing in Missouri typically fall within the range of 3% to 5% of the loan amount. This translates to roughly $1,800 to $3,000 for a $100,000 refinance. However, it’s important to remember that this is just an estimate, and your actual closing costs can vary depending on several factors, including:

  • Loan type: Different loan products might have varying associated fees.
  • Lender: Each lender has its own set of fees and charges.
  • Borrower’s credit score: Individuals with higher credit scores may qualify for lower closing costs.
  • Third-party service providers: Fees charged by appraisal companies, title companies, and other involved parties can vary.
  • Negotiation: You might be able to negotiate some closing costs with your lender.

Ways to Reduce Closing Costs in Missouri

  • Negotiate seller concessions: In a buyer’s market, request the seller cover some closing costs as part of the offer.
  • Shop around for lenders: Compare loan estimates and closing cost quotes from different lenders to find the most competitive offer.
  • Negotiate lender fees: Ask your lender if they can waive or reduce origination fees, processing fees, and other charges.
  • Choose a no-closing-cost mortgage: This option typically comes with a higher interest rate, so weigh the pros and cons carefully.
  • Consider a lender credit: Some lenders offer credits towards closing costs if you meet certain criteria, like good credit score or using their affiliated services.
  • Explore state and local assistance programs: Programs might exist for first-time homebuyers or low-income individuals to help with closing costs.
  • Compare title insurance companies: Get quotes from different title companies to find the best price.
  • Bundle homeowners and auto insurance: Some insurers offer discounts for bundling multiple policies.
  • Time your closing strategically: Closing costs might be lower during certain months or days of the week due to less demand.
  • Review closing disclosure carefully: Look for any errors or duplicate charges and ask for clarification if needed.

How to Avoid Paying Closing Costs When Buying a House

Is it really feasible to buy a home with zero closing costs? While 100% avoidance may not be possible, buyers can effectively get the seller to pay their closing fees by:

  • Making above-asking price offers
  • Waiving contingencies like appraisals/inspections
  • Agreeing to flexible closing dates
  • Assuming the seller’s remaining loan balance

Even paying moderately higher home pricing to the seller could be worthwhile if it offsets 2%-5% of the value in closing expenses.

How to Find a Trusted Real Estate Agent

A knowledgeable real estate agent well-versed in local markets can prove invaluable for navigating a real estate transaction. Here are tips for finding an agent you can trust in Missouri:

  • Ask friends and neighbors – The best referrals often come from happy former clients.
  • Interview multiple agents – Vet experience, specialties, communication style, area insight, and clientele.
  • Check licensing – All agents must register with the Missouri Real Estate Commission.
  • Read online reviews – Sites like Zillow and Realtor.com feature agent ratings.
  • Request references – Reputable agents will gladly provide client references.
  • Compare negotiations – Gauge negotiation capabilities by assessing actual sales prices compared to list prices.

Taking time to assess potential agents leads to the best partnerships facilitating smooth closings.

Conclusion

In Missouri’s real estate transactions, home buyers need to budget 2%-5%

while sellers require 6%-10% of the purchase price for closing costs. Various legal checks, taxes, insurance, commissions make up these fees. Both buyers and sellers can lower redundant costs through careful planning and negotiation without impacting the deal validity. Seeking professional help and preparing adequately smoothens the ownership switch despite significant closing outlays. So target resources smartly to navigate these inevitable transaction fees.

Frequently Asked Questions (FAQ)

What percent is closing costs in Kansas?

In Kansas, closing costs for home buyers typically range from 2%-5% of the purchase price. Sellers often pay around 6%-10% when including real estate agent commissions.

Does seller pay closing costs in Kansas?

In a Kansas home purchase, the seller customarily pays their share of closing costs including the real estate agent commission, half of escrow fees, title insurance premiums, and any unpaid property taxes or homeowner’s association dues.

Are houses expensive in Kansas?

Home prices in Kansas are relatively affordable compared to national averages. The median home value in Kansas as of 2022 is $197,300 which is below the overall US median of $354,165. Home prices vary across different cities and counties though.

What is the average cost of housing in Kansas City?

As of January 2023, the average listing price for a home in Kansas City, MO is $319,125 and in Kansas City, KS it’s $262,500. Overall Kansas City has relatively reasonable housing prices compared to other major Midwest cities.

Do buyers pay closing costs in Missouri?

Yes, it is customary for buyers to pay their share of closing costs in Missouri amounting to 2%-5% of the purchased home’s price. This covers lender fees, appraisals, inspections and portions of title & legal paperwork costs.

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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