What’s Included in Closing Costs (and How to Prepare)

Buying or selling a home in Michigan is exciting, but if you’ve ever heard the words “closing costs” tossed around and felt a little unsure, you’re not alone. Closing costs are simply the fees and expenses (outside of your down payment) that come due at the closing table. Understanding them ahead of time will help you feel confident, avoid surprises, and budget properly for your big move.

What Are Closing Costs?

Think of closing costs as the “wrap-up” expenses that come with finalizing a real estate transaction. They cover everything from lender fees to title insurance, and they can vary depending on whether you’re buying or selling, the price of the property, and even local requirements.

In Michigan, buyers typically pay 2–5% of the purchase price in closing costs, while sellers often cover real estate commissions, title transfer fees, and some state/county taxes.

Typical Buyer Closing Costs

Here’s what you’ll usually see if you’re buying a home:

• Loan Origination & Application Fees – Charged by your lender to process your mortgage.

• Appraisal Fee – Paid to an appraiser to confirm the home’s market value.

• Credit Report Fee – A small charge to pull your credit history.

• Title Search & Title Insurance – Protects you and the lender from ownership disputes.

• Recording Fees – Paid to the county to officially record your deed and mortgage.

• Homeowners Insurance & Property Taxes (Escrow) – Lenders often require you to prepay a portion of these.

• Survey Fee (if required) – Confirms property boundaries.

• Inspection Costs – While technically paid before closing, they’re still an important part of your upfront expenses.

• Agent Fees – Sometimes the seller won’t cover the buyer agent fees, so this could become part of your closing costs as well.

Typical Seller Closing Costs

As a seller in Michigan, your costs look a little different:

• Real Estate Commissions – Typically the largest expense, may be split between the listing and buyer’s agents.

• Transfer Taxes – In Michigan, sellers pay a state and county transfer tax when selling a property.

• Title Insurance (Owner’s Policy) – Often paid by the seller to guarantee clear title to the buyer.

• Outstanding Bills – This includes prorated property taxes, association dues, or utility bills up to the date of closing.

• Attorney or Closing Fees – Depending on your contract and local practice, sellers may pay a portion of closing fees.

How to Prepare for Closing Costs

1. Ask Early – Your lender should provide a Loan Estimate early in the process and a Closing Disclosure a few days before closing. These outline exactly what you’ll owe.

2. Budget Wisely – Don’t just plan for your down payment—add in 2–5% of the purchase price for buyers, and factor in commissions/transfer taxes for sellers.

3. Negotiate When Possible – Sometimes sellers can agree to cover part of the buyer’s costs as part of the offer.

4. Keep Funds Accessible – Most closing costs must be paid via cashier’s check or wire transfer. Make sure your funds are liquid and ready to go.

Final Thoughts

Closing costs aren’t the most glamorous part of buying or selling a home, but they’re an essential step toward getting those keys in your hand (or that check in your account). By understanding what’s included and preparing ahead of time, you’ll move through the process smoothly and with confidence.

If you’re thinking about buying or selling in Michigan and want a personalized breakdown of closing costs for your situation, I’d love to walk you through it step by step.