Closing Costs in Grand Rapids, Michigan

Closing Costs in Grand Rapids, Michigan

Closing costs in Grand Rapids, Michigan are the fees and costs that both the property seller and buyer incur during the sales of a home. However, the buyer incurs most of the closing costs.

In the state of Michigan, the average closing cost is $2,888 after taxes, or approximately 1.44% to 2.89% of the final home sale price. The state’s median home value is $154,500.

Over the past year, Michigan home values have increased by 5.5%. The median price of homes currently listed in the state is $189,000 while the median price of homes that sold is $151,500. The median rent price in Michigan is $1,200.

The question is, if you’re interested in buying a home in Grand Rapids, MI, what items should you expect in your closing costs?

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Closing Fee

This is the fee the title company receives as payments for the services they provide to close the real estate transaction. 

If you’re the one the selling the property, this is where you get your check and this stage is called close of escrow, settlement, closing, or any other terminology.

State Deed Tax/Stamps

This fee is a $3.75 per $500 or portion thereof of the property’s buying price. For example, if the buying price of the property is $250,000 it will be divided by $500 and then multiplied by $3.75. This means you will be asked to pay $1,875.00 at closing.

Administration Fee

This is the payment made to the broker for storing files kept for several years and regularly updating the do-not call list.

Keeping such files related to the property is required by the government and the files are passed on to the buyer and seller. Administration fees are hardly the same. They usually vary from one company to the next.

County Deed Tax/Stamps

This fee is a $0.55 per $500 or portion thereof of the buying price of the property. For example, if the buying price were $250,000/500, multiplied by 0.55, you would pay $275.00 at closing.

Underwriting and Processing Fee

This is the fee you have to pay to the lender in order for them to underwrite your loan. This fee is paid to cover for the cost the lender incurs for conducting research to ascertain your financial information such credit, income, employment etc.

Origination Fee

This is the fee you’re required to pay to your mortgage company to cover for all the administrative costs that are associated with your mortgage application and processing.

Credit Report Fee

This is the fee you’re required to pay to your lender (usually about $15 -$30) to cover for the cost of their services in pulling your credit report from the three major credit bureaus (Experian, TransUnion, and Experian).

Nonetheless, some lenders do waive this fee because of the discounts they get from these bureaus.    

Appraisal Fee

This is the fee you pay to the lender as part of the closing cost so they can appraise the property to ascertain its value before you purchase.

Flood Certification

This is the document that affirms the condition of the property if it’s located within a flood zone. This paperwork is issued by the Federal Emergency Management Agency (FEMA).

Tax Service Fee

This fee is reviewed and collected by the lender to ensure that a mortgagor pays their property taxes at the right time. This fee was created to protect lenders’ interest and access to collateral in the event that a borrower defaults.

Title search and Lenders Title Insurance

This is the fee that is associated to requesting for the services of a company to research the title of a home. The fee also entails buying an insurance policy to protect the lender if the title is found to contain one or more errors in the future.

Owner’s Title Insurance Policy

This policy was created to protect the property buyer who is also a borrower in the event of a legal flaw to the ownership of the title. This policy will protect you if any individual or organization challenges your ownership to the property for any reason.


This involves a careful and professional assessment of the geographical boundaries of the property. Amongst others, the survey will indicate roads, gas lines, walls, and encroachments etc.

Property Taxes

No Proration

The seller or the buyer is required to pay one or both the winter tax bill and the summer tax bill. This often depends on how both parties negotiate the property taxes.

Property Taxes in Grand Rapids, Michigan

Calendar Year Proration:

The West Michigan Regional Purchase Agreement clearly specifies how to handle property taxes. The seller (property owner) is responsible for the property taxes from the first day of the year (January 1) to the closing day.

For example, as the seller, if your property taxes were $3500, you’re required to divide that by 365 days to come up with a per diem or $9.59 per day. 

If the closing day is June, that means you would have spent 181 days.   This means you would be responsible for $9.59 x 181 days which equal $1800.95.

The seller or the buyer is required to pay one or both the winter tax bill and the summer tax bill. This often depends on how both parties negotiate the property taxes.

Fiscal Year Proration

Taxes will be prorated as if they are paid in arrears or in advance.

Title Insurance Fee

This fee is based on the purchase price of the property. The seller is responsible for the title insurance fee. The title insurance guarantees that the homeowner (the seller) has agreed to transfer marketable title to the property.

HOA Fees

Home Owners Association Fees are often paid monthly.If you sell or buy a home that has HOA Fees, such fees would be prorated for the month. The HOA Fees will cover for some services or amenities like snowplowing, sewer, lawn care, trash and some other services that are provided by the community.

Though HOA fees are often connected to condominiums, there are some other projects that are tied to associations. Be cautious whenever you intend to buy a home or a condo that has an association.

Every association has rules and regulations that homeowners are mandated to adhere to. If you hate being told what to do and what not to, you may consider staying away from such properties.

Home Warranty Plan

Either the buyer or the seller (homeowner) can buy the home warranty on the property. This warranty often covers several components of the property. In West Michigan, the basic home warranty often ranges from $400 up to $600 based on the warranty company and the plans you choose.  

Recording Fee

This is the fee that is payed to make a public record of your property purchase transaction.  

Transfer Tax

This is the levied tax to convey the home’s title from the previous owner (the seller) to the new owner (the buyer).

Brokerage Commission

This is one of the typical closing costs the seller is responsible for. This fee is often about 6% of the entire price of the property.

Lead-based Paint Inspection:

This is the fee you have to pay if you decide to hire a certified inspector to verify if the home has a toxic lead-based paint.

Brokerage Commission:

This is usually a typical closing cost that the seller is required to pay. Once the seller pays the brokerage fee, it is split between the real estate agents. This fee is usually about 6% of the property sale price.

Final thought

One of the easiest methods of paying your closing costs is to make the payment out-of-pocket as a one-time cost.

Also, you can finance your closing costs by folding them into your loan if your lender agrees. If you do, you’ll be required to pay interest on such costs throughout the mortgage’s lifetime.

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