Home buyers in Colorado typically encounter closing costs, and they can range from 2% to 5% of the purchase price on average. But there are a lot of variables that can affect the actual amount you’ll pay. Here’s an in-depth look at the typical closing costs for home buyers in Colorado, as of spring 2017.
Average Closing Costs for Colorado Home Buyers
Let’s start with a quick definition. The term “closing costs” refers to the various fees, taxes and charges that home buyers and sellers can incur during the sale of a home.
In Colorado, most of the different closing costs are paid by the buyer. But sellers incur some expenses as well, and the actual dollar amount they pay typically exceeds what the buyer pays (because of the real estate agents’ commissions).
According to a 2016 survey, home buyers in Colorado can expect to pay 3% to 5% of their home’s value in closing costs. This means that the actual amount you have to pay will partly depend on the price of the house you are buying.
The 2016 survey determined the following average closing costs for Colorado home buyers:
- Lender-related fees: $1,057
- Third-party fees (like home appraisals and credit reports): $933
- Total average cost to close: $1,990
Note: The above figures were based on a mortgage loan for the amount of $200,000, using a down payment of 20%. This is just one hypothetical loan scenario. In reality, there are quite a few variables that can affect the amount you pay. So let’s talk about those.
There Are a Lot of Variables
The costs you pay could differ from the averages listed above, and for a variety of reasons. Generally speaking, buyers purchasing more expensive homes tend to pay more in Colorado closing costs, and vice versa.
Additionally, some borrowers choose to pay “discount points” in exchange for a lower mortgage rate, and this can increase the total amount that is due at closing. A point is equal to one percent of the loan amount. Colorado home buyers who pay points usually plan to keep the loan for many years — or at least to the point where the money saved from the lower rate begins to surpass the extra amount paid at closing. (Contact us if you would like to explore this strategy.)
Negotiating Who Pays What
The question of who pays what can be negotiated during the real estate transaction. Home buyers in Colorado sometimes ask the seller to pay a portion of their closing costs. Whether it’s wise to do this will largely depend on the kind of market you’re in.
In a hot real estate market like Denver, where desirable properties elicit multiple offers, it’s less common for home buyers to ask for a closing cost “concession.” But in a slower market, a motivated seller might be willing to contribute money toward the buyer’s costs as an enticement. Seek your real estate agent’s advice on this one!