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Rhode Island Real Estate Closing Costs for Buyers

You've saved up for months or even years, you've gathered all your finances, and now you finally have enough for a down payment. But before you seal the deal, don't forget about closing costs. Read on to learn exactly what to expect and how much you may have to shell out at close.

You've saved up for months or even years, you've gathered all your finances, and now you finally have enough for a down payment. But before you seal the deal, don't forget about closing costs. Read on to learn exactly what to expect and how much you may have to shell out at close.

As you begin the exhilarating experience of buying a home, after the initial excitement of knowing you’re starting a new beginning, many worries begin to crop up — most of them finance-related.

Certainly, knowing if you’re able to afford a down payment on a home can be one of the most stressful and concerning aspects of purchasing a home. However, many home buyers don’t do all their research and miss factoring in additional upfront costs.

To be as prepared as possible and not get blindsided by extra out-of-pocket costs, before you buy a home, partner with an experienced, local real estate agentwho can set realistic expectations during the home buying process.

A great real estate agent can help you navigate the Rhode Island housing market, find cost-saving opportunities, and get you your dream home at the best price possible.

Are you ready to connect with a top-rated, Rhode Island 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.

Closing Costs for Rhode Island Homes: What to Expect

Along with your down payment, another expense you’ll run into when buying a home are closing costs.

You’ll run into closing costs at the end of the home purchasing process. And if you don’t factor in these extra fees, the expense can add up quickly and potentially put you in an unstable financial situation.

Some of the closing costs you can expect to pay include appraisal fees, attorney fees, transfer taxes, escrow fees, home inspections, title insurance, homeowner’s insurance, property taxes, recording fees, and application fees to name a few.

And as a buyer, you usually will pay the lion’s share of closing costs, typically adding up to between 2%—5% of the final sales price. According to recent data from Bankrate, Rhode Island closing costs add up to around $2,084.

However, the Bankrate data didn’t account for several variable costs, like title insurance, title search, taxes, other government fees, escrow fees, and discount points.

To take another example, if you’re looking to buy a home in Providence, RI, the median listing price is $224,900. With a buyer paying on average between 2%—5% of closing costs, the actual expense comes closer to a total ranging from $4,498 to $11,245.

Common Closing Costs for Rhode Island Home Buyers

Closing costs can add up fast so it’s always a good idea to come prepared and do your homework before you sign the dotted line. Here are few closing costs in Rhode Island that you as the buyer will be responsible for covering.

Attorney Fees

You’ll be required to pay for an attorney to look over any documents and agreements at closing.

Appraisal Costs

Your appraisal costs cover the fees for an appraiser to come out and assess the market value of your home. Appraisals are typically required by lenders and can cost on average between $300 and $500+.

Mortgage Origination Fee

This fee is charged by the bank or lender and covers the costs to create your loan. Generally the fee is approximately 1% of your mortgage amount though if you give more collateral, you may be able to negotiate a lower fee.

Escrow Fee

This expense is paid to the escrow company, an independent third party that oversees the closing process.

Transfer Taxes

In Rhode Island, transfer taxes are referred to as realty transfer taxes with the current rate at $2.30 per $500 of the sales price. However, there’s good news for you as the buyer, since usually the seller takes care of this cost.

Discount Points

A buyer is able to prepay interest by purchasing discount points. This helps reduce interest charged by the bank and lowers the monthly payment of your loan.

Commitment Fee

Rhode Island also includes a commitment fee which is a fee imposed by your lender to compensate them for their commitment to lend you the loan.

Flood Certification

Because much of the state borders water, Rhode Island also requires a flood certification fee to see if you’re located in a flood zone. If you are, you’ll have to pay the flood certification fee which is usually less than $15 and your lender may require you also pay for flood insurance.

Home Inspection

A home inspection is one cost of buying a home you won’t want to pass up. Your inspector will come out and check for any structural damage and for any major repairs needed.

Private Mortgage Insurance (PMI)

You’ll most likely be asked to pay PMI if your down payment is less than 20%. PMI protects the lender in the case that you cannot make your payments and end up in foreclosure. Depending on the amount of your down payment, you can expect to pay PMI from 0.3% to 1.5% of the loan.

Property Tax

The amount you pay in property tax will depend on the location of your home. However, most require payment within 60 days of purchase.

Recording Fee

Once you close, your home purchase needs to be recorded with your specific county. The fee for recording your property purchase is usually around $50.

Underwriting Fee

This fee is to pay for the expense of researching whether the lender will approve you for a loan. Typically, this fee costs around $500.

Processing Fee

This fee pays for the costs of processing your loan which includes covering for creating documents and verifying information.

Other Costs to Consider

While you may be cringing between the expense of the down payment and the slew of closing costs, unfortunately your expenditures don’t end there.

When buying a home, you’ll also have to figure in the recurring costs that come with homeownership. And along with your anticipated mortgage payment, there a few additional costs that are easily overlooked.

For instance, you’ll be required to pay homeowners insurance which helps cover potential damage to your home. While this can be included in your mortgage payment, keep in mind, the first year of homeowners insurance is typically paid during closing.

Additionally, you’ll have to pay property taxes with the amount varying by your home’s location. While many lenders lump in property tax with your mortgage, depending on your type of loan you may have to pay taxes separately.

While homeowners insurance and property taxes can eat away at your funds, don’t forget you’ll be paying utilities each month for electric, gas, and water. Many times, depending on your location, you could have to pay for garbage removal as well.

Be sure to also budget for any maintenance costs. Perhaps your home comes with a pool you need to take care of, or extreme weather takes a toll on your furnace or air conditioning units.

Homes always come with a few surprise costs. So before you pull the trigger and make the decision to purchase a home, ensure you’re well prepared and have enough financial stability and savings.

How to Save on Closing Costs in Rhode Island When Buying a Home

Investing in a home is a rewarding, yet expensive venture. To help ease some of the financial pressure, you can lower your closing costs by negotiating with the seller as the seller may be motivated to close on the home quick and be open to concessions.

You can negotiate with the seller to have them pay certain non-recurring fees such as the appraisal, broker fees, credit checks, or flood certification fees. Note that if you pay 10% or more of the down payment, sellers are able to cover 6% of closing costs.

Below a 10% down payment, however, the seller is only able to contribute 3% towards closing costs.

Another way you can receive assistance on paying for closing costs is through several Rhode Island assistance programs. For instance, you can get in touch with RIHousing who helps struggling buyers with homeownership costs.

You can also connect with the Housing Network of Rhode Island who has Down Payment and Closing Cost Assistance Program. And make sure to check on a city level as well, as the city of Cranston, RI has their own closing cost assistance program providing up to a $3,000 grant.

If you’re ready to jump into the home buying process, be sure to connect with Clever Partner Agents who are expert negotiators helping to minimize your closing costs and uncovering additional cost savings.

You can also participate in Clever’s Home Buyer Rebate program where on purchases of homes more than $150,000, you’re eligible to receive a $1,000 rebate that can go directly to helping cover your closing costs.


Jamie Ayers

Jamie is the Director of Content at Clever Real Estate, the free online service that connects you with top real estate agents and helps you save thousands on commission. In the past, Jamie has managed columns for clients in a variety of leading business publications, including Forbes, Inc., CEO World, Entrepreneur, and more. At Clever, Jamie's primary goal is to provide home sellers, buyers, and investors with the information they need to successfully navigate the ins and outs of the real estate industry.

See all Jamie's Posts

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