Understanding Closing Costs: What Buyers and Sellers Need to Know

Buying or selling a home is a major financial transaction that involves more than just the listed price of the property. One of the most frequently misunderstood aspects of the real estate process is closing costs.

If you're planning to purchase or sell property in Lima, Ohio, understanding the details of these costs can help you avoid surprises and better prepare for the financial aspects of closing.

What Are Closing Costs?

Closing costs refer to the fees and expenses paid at the end of a real estate transaction, separate from the property's sale price. These costs typically range from 2% to 5% of the home’s value, and responsibilities are usually divided between the buyer and seller.

Who pays which costs can vary depending on local customs, lender requirements, and terms negotiated in the purchase agreement.

Typical Buyer’s Closing Costs in Lima, OH

Buyers in the Lima market can expect the following common expenses:

1. Loan Origination Fee

A charge by the lender for processing the mortgage, usually about 0.5% to 1% of the loan amount.

2. Appraisal Fee

Lenders require an independent appraisal to determine the property’s market value. In the Lima area, this service typically costs between $300 and $500.

3. Home Inspection Fee

A general home inspection helps identify potential issues. This typically ranges from $300 to $400.

4. Title Search and Title Insurance

Title services ensure there are no ownership disputes. Combined title search and insurance fees can range from $400 to $900.

5. Property Taxes

In Ohio, property taxes are prorated at closing. Buyers may be responsible for paying a portion of the annual tax bill based on the closing date.

6. Recording Fees

These are paid to the Allen County Recorder’s Office to document the transaction and usually amount to $50 to $100.

7. Prepaid Items

These include upfront costs such as homeowners insurance premiums, mortgage interest, and escrow deposits.

Typical Seller’s Closing Costs in Lima, OH

Sellers also incur several costs at closing, including:

1. Real Estate Commission

Typically the largest seller expense, the standard commission is 5–6% of the sale price, which is usually split between the buyer’s and seller’s agents.

2. Title Transfer Fee

This covers the legal work associated with transferring ownership, generally between $100 and $200.

3. Prorated Property Taxes

Sellers are responsible for taxes up to the date of closing.

4. Optional Home Warranty

Some sellers choose to offer a home warranty to increase buyer confidence. This may cost approximately $400 to $600.

5. Seller Concessions

In some cases, sellers may agree to cover a portion of the buyer’s closing costs to help facilitate the sale.

Local Considerations for Lima, OH

While many closing costs are standard, local taxes, title fees, and recording practices in Allen County can influence your final amount. It's advisable to consult with your real estate agent or a local title company for a detailed breakdown tailored to your specific transaction.

How to Prepare

• Buyers should budget an additional 2–5% of the purchase price to cover closing costs.

• Sellers should plan for commission fees and other prorated expenses that can impact net proceeds.

Understanding these costs ahead of time can prevent last-minute issues and ensure a smoother transaction.

Need Help Navigating Your Closing Costs in Lima?

Whether you're buying or selling, working with an experienced local real estate professional can make a significant difference. Contact Garrett & Seth Real Estate Team for a personalized estimate and guidance through every step of your transaction.