In Oregon, closing costs can range from 2% to 5% of the home’s final sale price.
Closing costs, also known as settlement fees, are the expenses required to complete the sale of a home.
The terms in the purchase contract between the buyer and seller typically determine closing costs.
Generally, the buyer is responsible for covering most of the closing costs. However, there are situations where the seller may also be required to contribute to specific fees during the closing process.
The total cost can vary based on specific factors unique to your sale. In this article, we’ll walk you through the typical closing costs in Oregon so you know what to expect and can plan.
Closing Costs in Oregon
Closing costs for home sales vary between buyers and sellers. In Oregon, sellers generally cover expenses such as title and closing service fees, recording fees, and optional costs like buyer incentives, pro-rated property taxes, or attorney fees.
On the other hand, buyers are responsible for mortgage, appraisal, and inspection fees.
The fees charged by the lender, title company, and others to finalize your mortgage and transfer the property title can add up to 2-5% of the purchase price.
These are what you are expected to pay as closing costs in Oregon:
1. Loan Origination Fees
When you close on a home, the lender charges fees to process your mortgage application and underwrite your loan.
These are known as loan origination fees, typically ranging from 0.5% to 1% of your total mortgage amount.
These origination and third-party fees are in addition to your down payment, interest charges, property taxes, and insurance costs.
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I. Processing Fees
Processing fees cover the administrative costs of handling your mortgage application, like reviewing your paperwork and credit check.
This usually runs from $500 to $1,500, depending on the complexity of your application and loan amount. The processing fee is charged whether or not your loan is approved.
II. Underwriting Fees
The underwriting fee pays the underwriter to evaluate your application and determine if you qualify for the mortgage.
This runs from $500 to $1,500. Like the processing fee, it’s charged regardless of loan approval.
Some lenders combine the processing and underwriting fees into a single origination fee.
III. Appraisal Fee
An appraisal is required to determine if the property value is enough to secure the loan.
The appraisal conducted by a licensed appraiser determines the home’s estimated market value.
This is important for your lender to ensure the home is worth at least as much as your offer price.
Appraisal fees in Oregon average $350 to $700 for a single-family home. This must be paid upfront but is refunded if your loan is denied.
The cost will depend on the home’s square footage, amenities, and location.
2. Home Inspection Costs
A home inspection checks the overall condition of the property. An inspector will evaluate the home’s structural elements, electrical and plumbing systems, roof, attic, basement, and more.
They’ll provide a detailed report on any significant repair issues that must be addressed.
Home inspection fees in Oregon typically range from $300 to $500 for an average-sized house.
Additional inspections like termite, radon, or lead paint testing will cost extra but are often worth the investment.
3. Title Fees
When you buy a home, you must legally transfer the title and deed into your name.
Title fees cover the costs for title searches, insurance, and document preparation to transfer the title.
In Oregon, title fees typically range from $500 to $2,000, depending on the value and complexity of the property.
4. Escrow and Settlement Fees
The escrow and settlement process oversees the exchange of funds and legal documents between the buyer, seller, and lender.
Escrow fees in Oregon average between $500 to $1,500. The escrow company will collect signed paperwork, funds, and fees from all parties before officially recording the deed and distributing funds to the seller.
- Escrow fees cover the costs of administering the escrow account and facilitating the settlement.
- Settlement or closing fees refer to the transaction’s finalization charges, like document preparation, electronic document registration, courier fees, and wire transfer charges.
3. Owner’s Title Insurance
Owner’s title insurance protects you from potential losses due to defects in the property title, liens, or other undisclosed encumbrances.
In Oregon, owner’s title insurance fees are typically a one-time charge of 0.5% to 1% of the home’s purchase price.
The specific rate depends on the value of your home and current market rates. Owner’s title insurance is optional but highly recommended for your protection as the new homeowner.
Between the title, escrow, settlement fees, and owner’s title insurance, you can expect to pay between $1,500 to $5,000 in closing costs when buying a home in Oregon.
The exact total will vary depending on the specifics of your transaction and property.
Make sure you budget for these additional fees on top of your down payment and are prepared to bring a cashier’s check to the closing table.
4. Government Recording and Transfer Charges
Once you’ve signed the final paperwork, the last step is officially registering the sale with the government.
This typically involves paying your county clerk’s office various recording and transfer fees.
I. Recording Fees
To legally record the deed and formally transfer the title of the property into your name, you’ll need to pay recording fees, also called document fees.
These typically range from $50 to $200, depending on the county and number of pages.
The fees are used to register and archive the deed with the county clerk formally.
II. Transfer Taxes
Some states charge a transfer or real estate transfer taxes when property changes hands.
In Oregon, you’ll pay a real estate transfer tax of $1.10 per $1,000 of the sale price.
So if you’re buying a $250,000 home, the transfer tax would be $275. Transfer taxes must be paid before the county officially records and registers the deed.
III. Additional Charges
On top of recording and transfer fees, the county clerk’s office may charge smaller fees for things like certified copies of the deed or title searches.
There is also typically a small charge for registering the transaction on your county’s property tax records and updating information like the property’s assessed value and your name/address as the new owner.
Down Payment: How Much Should You Put Down?
When buying a home in Oregon, saving up for a solid down payment is key.
The more you can put down, the lower your interest rate and monthly payment will be. But how much should you aim for?
As a rule of thumb, 20% of the purchase price is ideal. At this amount, you’ll qualify for the best rates and avoid private mortgage insurance (PMI).
However, 20% can be a stretch for many homebuyers, especially first-timers.
Don’t worry; you can still get into a home with less. Aim for at least 5% down for an FHA loan or 3-5% down for a conventional 97 loan.
While your rate may be a bit higher and PMI required, these options still get you in the homeownership door.
If 20% isn’t possible now, start with a lower down payment and make additional principal payments with your monthly mortgage to quickly gain equity and drop PMI.
For example, if you put 10% down, pay an extra 10 to 15% of your payment each month.
Within a year or two, you’ll have 20% equity and can ask your lender to drop PMI, saving hundreds yearly.
The most important thing is to buy when you’re ready. Put down as much as possible to get the best deal, but don’t delay just to reach an arbitrary down payment goal.
Your home’s value could increase, costing you more in the long run. With low down payments and affordable interest rates, there are lots of options to help you achieve the dream of homeownership.
FAQ
Who Is Responsible for Paying Closing Costs in Oregon?
Closing costs are divided between buyers and sellers in Oregon. Typically, sellers are responsible for expenses such as title fees, documentary stamp taxes, owner’s title insurance costs, and recording fees at closing.
What Are the Seller Closing Costs in Oregon?
In Oregon, seller closing costs are typically around 2.45% of the home’s sale price, excluding realtor fees.
How Are Seller Closing Costs Paid in Oregon?
In Oregon, seller closing costs are generally deducted directly from the sale proceeds at the closing.
In rare cases where the proceeds are insufficient to cover the closing costs, sellers must make out-of-pocket payments.
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Conclusion
Closing costs vary in Oregon based on property value and location. While the specific fees will depend on your transaction details, you’ll want to set aside at least 2-5% of your purchase price to cover the essential closing costs.
When budgeting for closing costs and home purchases, be prepared for additional charges to avoid being caught off guard.
Ensure you understand all the closing costs before signing on the dotted line. You can also calculate your closing costs in Oregon with online closing cost calculators.