Congratulations! You’re only a few steps away from closing on your new home in Louisiana. But before your homebuying journey can come to an end, you’ll need to pay for closing costs..
Closing costs are the taxes and fees associated with the purchase and sale of a home, such as title insurance and lender fees. Let’s break down how much closing costs are in Louisiana, who pays for them, and what costs you can expect to pay as a buyer and as a seller.
How much are closing costs in Louisiana?
In addition to the down payment, homebuyers will also need to pay closing costs before securing the keys to their new home. As a general rule of thumb, you can expect closing costs in Louisiana to add up between 2%-5% of the home’s purchase price. But it’s important to remember that this is just a range and the total amount will depend on numerous factors, such as the purchase price of the home, the type of loan, and any adjustments negotiated with the seller.
For example, if you’re buying a home in Lafayette, which has a median sale price of $239,000, closing costs could range anywhere from $4,780 to $11,950. Or, let’s say that you’re buying a home in New Orleans, which has a median sale price of $360,125. Closing costs for a home here could be between $7,203 and $18,006.
Deciding between renting or buying your next home? Explore your options.
Compare the costs of renting vs buying and find a lender to secure your mortgage.
Deciding between renting or buying your next home?
Compare the costs of renting vs buying and find a lender to secure your mortgage.
Who pays closing costs in Louisiana?
Deciding between renting or buying your next home? Explore your options.
Deciding between renting or buying your next home?
In most areas, including Louisiana, both the buyer and the seller will pay closing costs. But the buyer and seller will pay for different closing costs and likely have different total closing cost amounts. Another thing to keep in mind is that buyers typically pay for closing costs out of pocket, while the seller’s closing cost payments are often deducted from the home sale proceeds.
Buyer closing costs in Louisiana
For homebuyers in Louisiana, you can expect to pay between 2%-5% of the purchase price. In most cases, you’ll pay earnest money, typically 1% to 3% of the home price, upon reaching mutual acceptance in your home purchase. This deposit is subtracted from your closing costs, reducing the total amount due at closing. Here are a few common closing costs that buyers typically cover:
- Appraisal fee: Your mortgage lender will require a home appraisal to ensure the home value is equal to or more than the loan amount. Home appraisals typically cost between $300 and $500, depending on location. If you pay at the time of service, it will not be included in your closing costs.
- Inspection fee: Home inspections generally range from $300 to $500 – they can vary based on local rates and the property’s specific characteristics. If you don’t pay for the inspection at the time of service, this will need to be paid at closing.
- Loan origination fee: Some lenders charge a fee for creating your loan. As you shop around for lenders, inquire about what it covers and whether it’s negotiable to avoid high fees.
- Loan processing fee: In addition to the origination fee, your lender may also charge a fee for processing your loan. This typically covers underwriting and related services. It’s recommended to discuss this fee with your lender to understand what this fee covers and if it can be waived.
- Loan discount points: If you’ve purchased points to lower your interest rate, you’ll usually pay a one-time fee at closing. Each point can lower your rate by 0.25% to 0.5%. Consider your long-term plans, such as how long you plan to own the home or if you plan to re-finance, before purchasing points.
- Private mortgage insurance (PMI): Required for down payments under 20%, PMI might involve an upfront fee at closing, depending on the loan type. It’s usually part of your monthly payment, but some loans offer the option to pay it as a one-time fee.
- Title insurance: Title insurance is a one-time fee paid as part of closing costs. Buyers typically cover both lender and owner title insurance policies.
- Homeowners insurance: Your annual homeowners insurance premium may be included in your closing costs in Louisiana.
- Homeowners Association dues: For homes in HOA-managed communities, you might have to pay one month’s dues at closing, which can vary depending on the property and covers maintenance and operational expenses.
- Property taxes: As part of closing costs in Louisiana, you may be required to prepay a portion of your property taxes at closing.
Seller closing costs in Louisiana
How much closing costs are in Louisiana for sellers will vary between each transaction, but here are some of the common fees and costs covered by sellers:
- Real estate agent commission fees: These fees can be a significant cost for sellers. Commission fees may vary and are subject to negotiation. Sellers should discuss their options with their agent.
- Homeowners Association fees: Sellers are generally responsible for settling any outstanding HOA fees or assessments up to the closing date, and they may need to provide HOA documents to the buyer as part of the sale.
- Property taxes: Any outstanding property taxes will be due at this time. However, if the seller has prepaid property taxes for the period that extends beyond the closing date, they may be credited back for the portion they’ve paid but won’t use.
- Title insurance: Owner’s title insurance is another common closing cost in Louisiana paid for by the seller.
Median home sale price data from the Redfin Data Center during July 2024.
