Trying to figure out closing costs for an Ann Arbor home sale or purchase can feel confusing. The fees have different names, some are negotiable, and a few depend on local customs in Washtenaw County. You want a clear picture so you can budget with confidence and avoid last‑minute surprises. In this guide, you’ll learn what buyers and sellers typically pay, what each line item covers, and where to verify exact numbers for your transaction. Let’s dive in.
What closing costs include
Closing costs are one-time fees and adjustments you pay at the end of a real estate transaction. They are separate from your down payment or the seller’s mortgage payoff. Costs cover lender charges, title and settlement services, government fees, prepaid items like insurance, and prorations for property taxes or HOA dues.
For buyers, a simple rule of thumb is to budget about 2% to 5% of the purchase price, not including your down payment. On a 400,000 dollar home, that is about 8,000 to 20,000 dollars. For sellers, real estate commission is often the largest expense. Other seller closing costs, excluding commission, commonly land around 1% to 3% of the sale price, though your exact total depends on your contract and payoffs.
By law, your lender must provide a Closing Disclosure at least 3 business days before closing. This document shows the final breakdown of every fee and credit, so you can review and ask questions before you sign.
Buyer closing costs in Ann Arbor
Buyer costs can be grouped into several categories. The exact amounts vary by lender, title company, and contract terms.
Loan and lender fees
- Origination or discount points. Sometimes 0% to 1% of the loan amount. Points are optional and negotiable.
- Underwriting, processing, and admin fees. Usually flat fees charged by the lender.
- Appraisal fee. Often about 400 to 800 dollars in Michigan, depending on property type and complexity.
- Credit report, flood certification, and tax service fees. Smaller third-party charges.
Title and settlement services
- Title search and exam. Confirms ownership and checks for liens.
- Lender’s title insurance policy. Required if you have a mortgage. The premium is based on the purchase price and can be a meaningful line item on higher-priced homes.
- Owner’s title insurance policy. Protects your ownership. This may be optional or negotiated in our area. Confirm who pays in your purchase agreement.
- Settlement or closing fee. A flat charge from the title or escrow company to conduct closing.
Government fees and transfer taxes
- Recording fees. The county charges to record your deed and mortgage.
- Transfer taxes. Michigan imposes a real estate transfer tax. Responsibility for payment can depend on local custom and contract terms. Confirm in your purchase agreement and verify the current rate with the Michigan Department of Treasury.
Prepaids and escrow reserves
- Prepaid interest. Covers interest from your closing date to the first mortgage payment.
- Homeowners insurance. Often the first year’s premium is collected at closing, or you will need proof of an active binder.
- Mortgage insurance, if applicable. Based on your loan program and down payment.
- Escrow deposits for taxes and insurance. Most lenders collect a few months of reserves at closing so your future bills can be paid on time.
Prorations and adjustments
- Property taxes and HOA dues. These are prorated to the closing date. You will pay for your share from closing through the end of the period, while the seller is credited for their portion.
- Utilities or other charges. Only if agreed in the contract.
Buyer tips to keep costs in check
- Ask your lender for a Loan Estimate early, then compare it to your Closing Disclosure before you close.
- Request a preliminary title report to spot liens or easements that might require attention.
- Shop eligible services. In many cases you can compare title and settlement providers.
- Clarify who pays for the owner’s title policy and transfer tax in your Ann Arbor purchase agreement.
Seller closing costs in Ann Arbor
Sellers see a different set of charges, most of which come out of sale proceeds.
Commission and mortgage payoff
- Real estate commission. Often the largest single cost for sellers. Rates are commonly in the 5% to 6% range nationally, though your listing agreement governs.
- Mortgage payoff. Includes outstanding principal plus daily interest up to the payoff date. Prepayment penalties are rare but possible.
Title and settlement fees
- Seller title charges. These can include document prep, payoff processing, and, in some cases, the owner’s title policy if that is local custom or a negotiated term.
- Recording or release fees. Covers recording the discharge of your mortgage.
Transfer taxes and government fees
- Transfer tax. Michigan assesses a transfer tax on property sales. Local custom often places this on the seller, but responsibility is contract dependent. Verify the current rate with the Michigan Department of Treasury and confirm your agreement’s terms.
- Recording fees. County fees for necessary documents.
Prorations, credits, and other items
- Property taxes and HOA dues. Credited to you up to the closing date, then the buyer takes over.
- Buyer credits or repair concessions. If negotiated, these reduce your net proceeds.
- Optional home warranty. Sometimes offered to increase buyer confidence.
Seller planning tips
- Order a payoff statement early and check the good-through date.
- Ask your title company or agent for a seller’s net sheet so you can model your proceeds with realistic numbers.
- Confirm who pays for the owner’s title policy and transfer taxes in Ann Arbor area practice before you sign a contract.
Ann Arbor and Washtenaw County specifics
Local practices and fees can vary, which is why you should verify details with the right offices.
- Michigan transfer tax. The state imposes a real estate transfer tax. Who pays can be guided by local custom and your contract. Verify the current rate and any exemptions with the Michigan Department of Treasury.
- Washtenaw County recording fees. Deed and mortgage recording fees are set by the Washtenaw County Register of Deeds. Check the county’s current fee schedule and document requirements.
- City of Ann Arbor charges. Many Michigan municipalities do not add their own transfer tax, but confirm whether any city-specific fees apply with the City of Ann Arbor or your title company.
- Title insurance customs. In some Michigan areas, sellers pay the owner’s policy. In others, buyers do. Local title companies and the Ann Arbor Area Board of REALTORS can confirm the common practice for your neighborhood and price point.
- Property taxes and proration. Millage rates vary by township or city and by school district. Your taxes will be prorated as of the closing date. For current assessments and tax calendars, check with the Washtenaw County Treasurer or your local assessor.
How much should you budget?
Every transaction is unique, but these examples show how costs can add up. Treat them as estimates only. Always request a written estimate from your lender and title company.
Example buyer budget on a 400,000 dollar purchase
- Total buyer closing costs: 2% to 5%, or about 8,000 to 20,000 dollars.
- Mid-range sample around 12,500 dollars:
- Loan origination, processing, underwriting: 2,500 dollars
- Appraisal: 600 dollars
- Title and lender’s title policy: 1,800 dollars
- Closing or settlement fee: 450 dollars
- Recording and local charges: 150 dollars
- Prepaid homeowners insurance: 1,200 dollars
- Prepaid interest: 900 dollars
- Escrow deposits for taxes and insurance: 4,000 dollars
- Other lender or third-party fees: 900 dollars
- Transfer tax is separate and depends on state and county rates and your contract. Confirm with the Michigan Department of Treasury and your title company.
Example seller budget on a 400,000 dollar sale
- Commission at 5% example: 20,000 dollars
- Other seller closing costs, excluding commission: often 1% to 3% of sale price, or about 4,000 to 12,000 dollars
- Additional items: mortgage payoff, prorated taxes, any agreed credits, and transfer tax if seller-paid
Your exact numbers will shift based on your timing, loan program, and what you negotiate in the purchase agreement.
Timeline and documents to review
Knowing when numbers become final helps you avoid surprises.
- Pre-approval and Loan Estimate. When you apply for a loan, your lender issues a Loan Estimate that outlines key fees and estimated cash to close.
- Title commitment. Your title company will issue a preliminary report that shows ownership, liens, and requirements to close.
- Appraisal. Your lender orders this after you are under contract. The fee is usually paid up front or at closing.
- Final walkthrough. Typically scheduled within 24 hours of closing to confirm property condition.
- Closing Disclosure. By federal rule, you must receive the Closing Disclosure at least 3 business days before closing. Review it line by line and ask your lender or title company to explain any differences from your Loan Estimate.
Quick checklists
Buyer checklist
- Request a Loan Estimate from your lender and compare it to your Closing Disclosure.
- Ask which title or settlement services you can shop and get quotes.
- Confirm who pays transfer taxes and the owner’s title policy in your Ann Arbor contract.
- Verify escrow deposits for taxes and insurance so you are ready for your first mortgage payment.
- Review your title commitment early to address any liens or easements.
Seller checklist
- Order your mortgage payoff statement and check the payoff-through date.
- Ask for a seller’s net sheet to model your proceeds with realistic costs.
- Confirm local custom on owner’s title policy and transfer tax payment.
- Disclose and resolve any municipal or special assessments that could affect closing.
- Decide early on any buyer credits or warranties you are willing to offer.
Negotiation levers
- Seller concessions. You can agree to pay some buyer costs. Lenders often cap concession amounts based on loan program and down payment.
- Points and rate options. Buyers can weigh paying points against monthly savings.
- Title fees and providers. Where allowed, shop for competitive title and settlement fees.
- Transfer tax and owner’s policy. In many cases, these are negotiable and guided by local norms.
Move forward with confidence
Closing costs do not have to be a mystery. With the right estimates, clear contract terms, and a trusted local team, you can plan your cash to close or net proceeds with confidence. If you are comparing options, ask for a side-by-side estimate from your lender and title company, then review it with a knowledgeable agent.
Ready for personalized guidance on your Ann Arbor move? Connect with the local advisors at Fortress Realty for buyer and seller representation, net-proceeds and affordability tools, and finance-savvy support from offer to closing.
FAQs
How much should I budget for closing costs in Ann Arbor?
- Most buyers budget about 2% to 5% of the purchase price, while sellers plan for commission plus roughly 1% to 3% in other closing costs, then verify exact numbers with lender and title.
Who pays the Michigan transfer tax in an Ann Arbor sale?
- Responsibility is set by your purchase agreement and local custom, which often places it on the seller; confirm your terms and verify current rates with the Michigan Department of Treasury and your title company.
Can I roll closing costs into my mortgage as a buyer?
- Some fees can be financed depending on loan program and appraisal, which increases your loan amount and monthly payment; ask your lender to model both scenarios.
What items are prorated at closing in Washtenaw County?
- Property taxes and HOA dues are commonly prorated to the closing date, and utilities or assessments may be included if your contract specifies them.
How can a seller reduce closing costs without hurting the deal?
- Compare listing proposals, shop eligible title services, avoid unnecessary concessions, and handle repairs or assessments early to limit last-minute credits.
