Closing costs are an essential part of buying a house in Virginia, and, as daunting as it may be, the better prepared a buyer is to handle them, the smoother the process will be.
A good way to approach these expenses is knowing and prioritizing the costlier ones first. Work with an experienced buyer’s agent and your mortgage broker to estimate how much these costs may be and then budget accordingly.
Just remind yourself: if you’re ready to consider closing costs, you’re probably that much closer to becoming a homeowner. Below, we’ll break down essential buyer closing costs in Virginia so that you’re well-prepared for the final stretch of your home buying journey.
What are buyer closing costs in Virginia?
In general, closing costs are expenses you will be responsible for at closing and can include mortgage origination fees, escrow fees, real estate transfer tax, and title insurance, among others. Homebuyers usually face similar types of closing costs no matter where they buy.
"We try to educate and prepare our clients for closing costs as early as possible," said Heather Bennett, a licensed real estate agent with Prevu Real Estate in Virginia. "It’s hard enough as it is to save up for a down payment, but many first-time homebuyers are not always aware of the funds they will need for closing costs."
It’s important to remember that closing costs can vary depending on each buyer’s situation. Some may be paying all cash and won’t worry about loan origination fees, while others will have to pay extra for specialized home inspections.
Luckily, it’s possible to plan ahead and anticipate which closing costs you can expect to pay when it’s time to close. Working closely with an experienced real estate agent is key, as they can help you estimate and prepare for these expenses.
Types of buyer closing costs in Virginia
- Mortgage origination fees
- Real estate transfer tax
- Appraisal fees
- Homeowner’s insurance
- Property taxes
- Attorney fees
- Escrow fees
- Title insurance
- Home inspection fees
How much are average closing costs in Virginia?
In Virginia, buyer closing costs generally range from 2% to 5% of the home's purchase price. So if you were to purchase a $750,000 home, you could potentially expect anywhere from $15,000 to $37,500 in closing costs. Don’t forget, however, that these costs can vary significantly based on your type of loan and lender fees, government fees, and property specifics, among other factors.
One of the best ways to prepare for these expenses is to prioritize the costlier ones first; in Virginia, loan origination fees (if you’re getting a mortgage) and transfer taxes can sometimes be the most expensive of the bunch.
In most cases, the loan origination fee typically amounts to 1% or more of your loan amount, depending on the lender and your specific terms. Both the buyer and seller pay real estate transfer tax in Virginia, with the buyer typically responsible for the state and county deed transfer tax. If the buyer is using a mortgage to purchase the property, they will also pay a recording tax to both the State of Virginia and the county.
How to estimate buyer closing costs in Virginia
Your buyer’s agent and mortgage broker will be your trusted guides here, as it can get confusing with so many numbers floating around.
Start by considering the fixed costs. The deed recordation tax is applicable to buyers using a mortgage loan; it is calculated based on the obligation amount and can usually be easily estimated. The same often goes for county-specific fees and taxes.
As you shop for a suitable mortgage, you can work with your potential lender to get a clear estimate of the origination fee you may be responsible for so you can start budgeting early.
Lastly, remember that certain closing costs can vary based on your particular situation. If you’re purchasing an older home, you may need a more thorough (and expensive) home inspection. On the other hand, if you’re putting down a larger down payment and borrowing less, your origination fee could be lower.
How to reduce buyer closing costs in Virginia
- Negotiate with the seller
- Shop for mortgage rates and fees
- Use a commission rebate
Negotiate with the seller
One of the most straightforward ways to reduce closing costs is to negotiate with the seller for concessions.
In a seller concession, the seller agrees to pay a portion of the buyer's closing costs. Whether the negotiations are successful can depend on many factors, especially the state of the market. It’s best to work closely with your agent to determine the best approach when asking for concessions.
"Buyers need to remember that in a seller’s market - like the one we’ve seen for the past two or three years - inventory is tight, and sellers are less likely to be flexible about concessions," said Bennett. "It’s all about understanding what might be possible as you prepare to negotiate."
It’s also worth considering the seller's motivation to close the deal. If the seller is in a hurry to sell the property due to a job relocation or personal reasons, they might be more inclined to contribute to closing costs.
Shop for mortgage rates
Different lenders can offer different interest rates and loan terms, so it's in your best interest to explore your options. You could start by getting a rate quote from your bank but also consider credit unions, mortgage companies, and online lenders.
When comparing loan estimates, pay attention to the interest rate and the annual percentage rate (APR). The interest rate is what you'll pay annually to borrow the money, not including fees, while the APR includes both the interest rate and upfront costs (like loan origination fees) and provides a more comprehensive picture of the loan's cost.
Don't forget to look at the loan terms and any fees associated with the mortgage. Some loans might come with lower interest rates but higher upfront fees. Understanding these trade-offs can help you choose the best loan for your situation.
Use a commission rebate
Arguably the least talked-about tool for offsetting closing costs is commission rebates.
Also known as home buyer refunds, rebates are a portion of your buyer agent’s commission fee given back to you in the form of extra savings.
Modern brokerages like Prevu Real Estate invest in salaried agents and a streamlined, digital home buying platform to help Virginia homebuyers access commission rebates and save money when they buy.
For example, Prevu currently offers the largest rebate in Virginia, allowing buyers to potentially receive up to 1% of the home’s purchase price via commission rebate after closing. So if you were to purchase a $1,400,000 home in Arlington, you could receive up to $14,000.
Having a sizable chunk of cash after closing can be a huge relief for buyers facing steep closing costs. Rebates can help offset them, replenish your savings account, or simply provide a budget for renovations or new furniture for your home.
Interested in buying a house in Virginia? Browse listings and see how much you can save with Prevu’s Smart Buyer Rebate.
