When it comes to finally owning your own piece of paradise in Hawaii, don’t forget to factor in closing costs. These fees are an essential final step in turning your dream of a home into a reality. Being prepared for these costs will allow you to fully enjoy your new island lifestyle without any unexpected surprises.
If you’re feeling overwhelmed or unprepared, don’t fret. To assist you in budgeting for closing costs, this Redfin article will delve into the specifics of how much closing costs are in Hawaii, who is responsible for paying them, and the various costs that buyers and sellers can expect to encounter.
How much are closing costs in Hawaii?
Prior to receiving the keys to your new home, buyers in Hawaii must cover closing costs. On average, closing costs in Hawaii typically range from 2% to 5% of the home’s purchase price. However, it’s important to note that the exact amount of closing costs can vary based on factors such as the home’s purchase price, the type of loan, and any negotiations made with the seller.
For example, if you’re purchasing a home in Kailua with a median sale price of $782,500, you can anticipate closing costs to fall between $15,650 and $39,125. On the other hand, if you’re buying a home in Hilo with a median sale price of $500,000, closing costs could range from $10,000 to $25,000.
Who pays closing costs in Hawaii?
In most real estate transactions, both the buyer and seller are responsible for paying closing costs in Hawaii. However, the buyer and seller will cover different closing costs and may have varying total amounts. Typically, buyers pay closing costs out of pocket, while the seller’s closing costs are deducted from the proceeds of the home sale.
Buyer closing costs in Hawaii
Buyer closing costs in Hawaii generally range from 2% to 5%. If you have already paid earnest money, this amount will be deducted from your closing costs, reducing the total amount due at closing. Earnest money typically amounts to 1% to 3% of the home’s price. Here are some common closing costs that buyers may encounter:
- Appraisal fee: Typically between $300 and $500, an appraisal is required by your mortgage lender to ensure the home’s value meets or exceeds the loan amount.
- Inspection fee: Home inspections generally range from $300 to $500 and are crucial for assessing the property’s condition.
- Loan origination fee: Some lenders charge a fee for creating your loan, so it’s important to understand what this covers.
- Loan processing fee: In addition to the origination fee, lenders may charge a fee for processing your loan.
- Loan discount points: Buying discount points can lower your interest rate, but it comes with a one-time fee at closing.
- Private mortgage insurance (PMI): Required for down payments under 20%, PMI may involve an upfront fee at closing.
- Title insurance: A one-time closing cost that buyers often pay for both lender and owner policies.
- Homeowners insurance: Annual premiums may be included in closing costs in Hawaii.
- Homeowners Association dues: If applicable, buyers may need to pay upfront dues at closing.
- Property taxes: Prepayment of property taxes may be required as part of closing costs.
Seller closing costs in Hawaii
Sellers in Hawaii may be responsible for various closing costs, including:
- Real estate agent commission fees: These fees can be a significant cost for sellers and are usually negotiated with the listing agent.
- Homeowners Association fees: Sellers are typically required to settle any outstanding HOA fees up to the closing date.
- Property taxes: Sellers must pay any accrued property taxes up to the closing date.
- Title insurance: Sellers may cover the cost of owner’s title insurance based on the property’s sale price.
- Transfer taxes: Sellers are responsible for state and local transfer taxes, which are usually a percentage of the sale price.
Median home sale price data sourced from the Redfin Data Center as of July 2024.