Closing Costs in Honolulu, HI

Closing Costs in Honolulu, HI

Closing Costs In Honolulu, HI – What Can You Expect?

Typically, first-time homebuyers concentrate on saving their money for the down payment needed for their new home. 

However, you should also put the closing costs into perspective because even though it’s a one-time payment, it still is an essential expense. 

The closing costs consist of different fees and commissions packed in one one-time payment. They can include attorney fees, taxes, lender costs, a title search, other upfront housing expenses like insurance policies, and so on.

Depending on the type of fee, some are paid by the sellers and some by the buyers. You also have the right to negotiate and lower your lender’s fees and/ or make a deal for the seller to cover some of the closing costs. 

However, there are certain costs that are fixed and cannot be changed such as the recording or transfer taxes charged by your state or local government at the place where you are buying the house or condo.

Closing Costs in Honolulu, HI

As said, the amount of the closing costs varies according to the location where you are buying the property, it also varies by the size of your loan and the local tax laws. 

Being specific to Honolulu, HI, stats show that here the expected closing cost range varies between $6,545.78 and $8,284.50 with the average total closing cost being $7,364. 

Considering that the average home sale price is anywhere from $800,000 to $900,000, this puts the closing costs at a percentage of 0.82% to 0.92% to the average home sale price.

Closing Costs in Honolulu, HI

Closing Costs Explained

Inexperienced Hawaii home buyers are oftentimes confused by the additional expenses they need to pay when closing a deal for their real estate purchase. As stated in the Hawaiian law, you as a buyer must receive a loan estimate by the third day of submitting your loan application to your lender. 

In this estimate, you will see a part where closing costs are calculated, and no less than three days before you schedule your closing with the seller you should receive the final amount of your closing costs and your loan. Below you will see the three most important parts of the closing costs.

Lender Fees

To go into further detail regarding the closing costs in Hawaii, we will first start with the lender fees. This is one part of the closing cost that can be presented differently, depending on the lender. Namely, a lender can wrap all their costs into an “origination” fee while some will break them into parts listed as appraisal costs, courier fees, administrative fees, transfer taxes, a flood certification (if required), processing fees, and a credit check.

Title Fees

Title Fees

Title fees are an important part of the closing costs as they actually amount to approx. 70% of the entire sum. Because of this high percentage, experts oftentimes advise buyers to shop for title services if they can in order to lower the number of their total closing costs. 

What you are looking for basically is a title search, title insurance, and settlement services. While the premiums of the title insurance are more or less the same thus it does not matter where you get it from, the settlement service fees vary considerably from company to company. 

In order to pick the ones that suit you best, browse between the ones that are offered and make sure you understand everything that is covered. This should include a title search and courier fees as well.

Buyer Title Insurance

This insurance protects you, the buyer, in the event that liens or clouds are placed on the property after a sale, which can cover the legal service fees connected to litigation caused by another person or entity that is trying to lay claim to the title of the property.

Other Closing Cost Fees

Other Closing Cost Fees

Regarding the coverage of the closing costs anywhere in Hawaii, it is customary for the payment to be divided in 60% and 40%, where the seller pays the larger amount, while the buyer pays the rest. In addition, you can find all the proprietary costs that are included in the closing costs in Honolulu, Hawaii.

  • Homeowners Insurance Premium
    This is a cost that covers the insurance for the new homeowners.
  • Mortgage Preparation

The mortgage or note preparation fees are expenses that cover the lender fees for drafting the loan for your home.

 

  • Fees for obtaining the consents of the buyer

These fees include various inspections done for the buyers.

 

  • Government Recording Fees

These expenses accumulate in the form of deed and mortgage recording at their county’s Bureau of Conveyances office.

 

  • The Notary Fees for the Buyer

If you as a buyer sign the closing documents outside of the designated escrow office, you will be charged with this fee.

 

  • Title Document Preparation and Escrow Fees

This fee is split into two equal parts between buyers and sellers. The reason why escrow and title companies are the intermediaries between you and the person who sells you the house is that in addition to coordination between parties, these parties make sure both sides of the real estate deal are adherent to the contract between them. With this, they also coordinate the payoffs and prepare the complete closing documentation.

Title Document Preparation and Escrow Fees
  • Association Transfer Fees and Condominium Fees

The association documents in the case of buying a house or a condo should include budget, board meeting minutes, house rules, bylaws, association disclosure, and the like. While globally these are paid by one side of the contract, by sellers, buyers, or the lender, in Hawaii it is customary for the seller to cover them. Keep in mind that homeowners associations charge standard transfer fees on top of this.

  • Pest Inspection
    Usually covered by the seller
  • Home Loan Discount Points and/or Fees;
    and
  • Future Homeowners Association Dues & Prorated Property Taxes.

You may be subject to other closing costs when buying realty in Honolulu, HI. This all depends on the agency and seller, as well as the location, so it is best to ask upfront and get well informed before making any decisions. Also, you should get informed about the cost of living in Honolulu, and if moving with your family, here you can find the best schools in the area.

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