If you are buying your first home, you may be surprised to see how many costs and fees you will have to pay. Yes, the cost of the home is by far the largest, but during the closing process you will negotiate and pay many different fees, costs, and taxes.
There are realtor fees and commissions that are paid for by the seller and mortgage fees that are paid by the buyer. However, who pays transfer taxes, appraisal fees, and other costs can vary from state to state.
Aside from the down payment, the costs buyers are responsible for in Louisiana can be quite complicated. An experienced, local real estate agent can guide you through which costs you need to be prepared for before pulling the trigger on your Louisiana home purchase.
Closing Costs for Louisiana Homes: What to Expect
According to a recent Bankrate study, closing costs in Louisiana average just over $2,100. However, this can vary greatly depending on the cost of your home, and variable costs, like taxes or those based off of the amount of your loan, were not included in this study.
However, closing costs are usually between 2-5% of the purchase price of your home. In Louisiana, where the median home value is $147,000, that would equate to closing costs of around $4,410. Again, this can be highly variable and your expert, local real estate agent can best walk you through which fees you will likely have to pay.
Common Closing Costs for Louisiana Home Buyers
Buyers are responsible for a number of costs in the closing process, and those that are typically their responsibility are related to mortgage fees. Lenders typically charge origination fees, underwriting fees, and credit report fees for the administrative costs of approving your loan.
Buyers also will need to pay their own appraisal, home inspection, and title search fees to ensure their home is valued correctly and has no major issues before the transaction is final. These fees may be itemized by your lender or title company, but ultimately are fully paid by the buyer.
Other fees include:
Escrow Fees — Paid to the title company for managing the closing process, and can include fees for attorneys.
Escrow Deposit — Funds deposited to cover mortgage insurance and property taxes for up to two to three months.
Flood Determination/Insurance — Important in Louisiana, and clarifies if homes are in an area prone to flooding and thus need flood insurance.
Homeowners Association Fees — These vary by association and are typically paid by the seller, but are easily overlooked.
Homeowner’s Insurance — The first year is typically paid at closing.
Lender’s Policy Title Insurance — This protects the lender from any title issues that may arise throughout the mortgage terms.
Owner’s Policy Title Insurance — This protects the buyer should their ownership be challenged or other title issues arise.
Title Search/Exam Fee — The title company searches all the historical title documents for issues or if anyone else may have a claim to the property.
Taxes are also highly variable and typically increase with the value of your home. Fortunately for buyers Louisiana doesn’t have a real estate transfer tax. However, property taxes can vary greatly from city to city, but are typically only paid by the seller.
Other Costs to Consider
There are many other costs associated with owning a home beyond the purchase price and closing costs. Once you own your home you will need to be prepared for home maintenance, property taxes, HOA fees, utilities, and many other costs. Hopefully, you’ve planned for these as part of the decision-making process before making your home purchase.
Property taxes are another big cost and vary throughout the state. The tax bill across the state is around $250 on a median priced home, but ranges up to $1,300 in St. Tammany Parish (.66% of market value), and as low as $200 (or .25% of market value) in St. Landry Parish.
These ongoing costs underscore the need to be financially prepared for your home purchase. Working with an expert real estate agent will help you identify not only a home within your budget, but what sort of repair and maintenance issues you should be on the lookout for when purchasing a Louisiana home.
How to Save on Closing Costs in Louisiana When Buying a Home
Most closing costs can be negotiated, which is why if you are purchasing on a budget you will want to work with an expert real estate agent who knows how to negotiate on your behalf. Clever Partner Agents are expert negotiators who can help minimize your closing costs and uncover additional cost savings throughout the home buying process.
For example, if you find issues after a home inspection that will require major repairs, like mold or foundation work, your agent should negotiate a better price for you. If the sellers are unwilling to complete the repairs or negotiate a better price you should be able to walk away if you have inspection contingencies.
Connecting with a Clever Partner Agent is a great way to get started on your home purchase. If you’re buying, you’ll get help with the house hunting process, walkthroughs, offer letters, negotiations, paperwork, and closing.
Want to connect with a top-rated, Louisiana buyer’s agent? Clever can help! Fill out our online form and we’ll be in touch to answer any questions you might have and introduce you to one of our local Partner Agents for a no-obligation consultation.