In Rhode Island, closing costs are an important factor to consider as you wrap up your home purchase. These costs, including fees for title searches and local taxes, can be substantial. To ensure a smooth transition, plan for these expenses ahead of time and hold off on major purchases until after the closing process is complete and you have the keys to your new home. If you’re feeling unprepared or overwhelmed, don’t worry. To help you budget for closing costs, this Redfin article will cover how much closing costs are in Rhode Island, who pays for them, and which costs you can expect to pay as a buyer and as a seller.
How much are closing costs in Rhode Island?
Before securing the keys to your new home, homebuyers will need to pay for closing costs. Generally speaking, closing costs in Rhode Island can range anywhere from 2%-5% of the home’s purchase price. However, keep in mind that closing cost amounts vary depending on a number of factors – such as the purchase price of the home, the type of loan, and any adjustments negotiated with the seller.
Let’s say you’re buying a home in Providence, where the median home sale price is $515,000. Based on this, you could expect closing costs to be between $10,300 and $25,750 . Whereas if you’re buying a home in Cumberland, which has a median sale price of $465,000, closing costs could range from $9,300 to $23,250.
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 Rhode Island?
Deciding between renting or buying your next home? Explore your options.
Deciding between renting or buying your next home?
Usually both the buyer and the seller pay closing costs. But the buyer and seller will pay for different closing costs and likely have different total closing cost amounts. Keep in mind that it’s common for the buyer to pay closing costs out of pocket, while the seller’s closing costs are deducted from the home sale proceeds.
Buyer closing costs in Rhode Island
Closing costs in Rhode Island for homebuyers usually range from 2%-5%. 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. Below are some of the common closing costs paid for by the buyer:
- Appraisal fee: Home appraisals, which typically range from $300 to $500, are usually paid for separately at the time of the service. However, if not, you’ll need to pay for this at closing.
- 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: Most lenders charge a fee for creating your loan. Be sure to check with your lender what this fee covers and if it can be waived or negotiated.
- 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 Rhode Island.
- Homeowners Association dues: If your property is part of a homeowners association, you’ll likely pay one month’s dues upfront at closing. These fees vary and contribute to maintenance and operational costs.
- Property taxes: As part of closing costs in Rhode Island, you may be required to prepay a portion of your property taxes at closing.
Seller closing costs in Rhode Island
How much closing costs are in Rhode Island for sellers will vary between each transaction, but here are a few common closing costs that sellers pay for:
- 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: If the property is part of an HOA, the seller may need to pay a variety of fees. These can include HOA transfer fees, outstanding dues, and possibly a fee for obtaining HOA documents required by the buyer. The exact fees will depend on the HOA’s rules and regulations.
- 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 Rhode Island paid for by the seller.
- Transfer taxes: In Rhode Island, there is a state levied tax on the transfer of ownership of a property. Sellers can expect to pay a one-time transfer tax as part of closing costs. There may also be additional taxes levied by local governments, such as counties and cities.
Median home sale price data from the Redfin Data Center during July 2024.
