How Much Are Closing Costs in Iowa 2024?

Congratulations! You’re only a few more steps away from closing on your new home in Iowa. But before you can officially get the keys, one of the last steps is to pay closing costs.

Closing costs are the taxes and fees associated with the purchase and sale of a home, such as title insurance and lender fees. Let’s break down how much closing costs are in Iowa, who pays for them, and what costs you can expect to pay as a buyer and as a seller.

How much are closing costs in Iowa?

Before securing the keys to your new home, homebuyers will need to pay for closing costs. As a general rule of thumb, you can expect closing costs in Iowa to add up between 2%-5% of the purchase price. However, keep in mind that closing cost amounts vary depending on a number of factors – such as the purchase price of the home, the type of loan, and any adjustments negotiated with the seller.

Let’s say you’re buying a home in Des Moines, where the median home sale price is $221,000. Based on this, you could expect closing costs to be between $4,420 and $11,050. Whereas if you’re buying a home in Waukee, which has a median sale price of $377,000, closing costs could be anywhere from $7,540 to $18,850.

Who pays closing costs in Iowa?

So, who pays for closing costs in Iowa? In most transactions, both the buyer and seller will pay closing costs. But, each party’s closing costs amount will vary depending on what they are required to pay. Keep in mind that it’s common for the buyer to pay closing costs out of pocket, while the seller’s closing costs are usually deducted from the home sale proceeds.

Buyer closing costs in Iowa

For homebuyers in Iowa, you can expect closing costs to range 2%-5% of the purchase price. If you paid earnest money, this amount will be subtracted from your closing costs, which will reduce the total amount you owe at closing. Earnest money is typically between 1%-3% of the home’s price. Here are a few common closing costs that buyers typically cover:

• Appraisal fee: Home appraisals, which typically range from $300 to $500, are usually paid for separately at the time of the service. However, if not, you’ll need to pay for this at closing.
• Inspection fee: Although not required, a home inspection is highly recommended. Home inspections generally range from $300 to $500 in cost and are usually paid at the time of service. However, if not, it will need to be paid at closing.
• Loan origination fee: Some lenders charge a fee for creating your loan. As you shop around for lenders, inquire about what it covers and whether it’s negotiable to avoid high fees.
• Loan processing fee: In addition to the origination fee, your lender may also charge a fee for processing your loan. This typically covers underwriting and related services. It’s recommended to discuss this fee with your lender to understand what this fee covers and if it can be waived.
• Loan discount points: If you buy discount points to lower your interest rate, you’ll pay a one-time fee at closing. These points can lower your rate by 0.25% to 0.5%, but consider your long-term homeownership plans before paying for a reduced rate.
• Private mortgage insurance (PMI): When your down payment is under 20%, you’re typically required to pay PMI. Some loans allow upfront PMI payment at closing, giving you the choice between higher upfront costs or increased monthly payments.
• Title insurance: Title insurance is a one-time fee paid as part of closing costs. Buyers typically cover both lender and owner title insurance policies.
• Homeowners insurance: Your annual homeowners insurance premium may be included in your closing costs in Iowa.
• Homeowners Association dues: If your property is part of a homeowners association, you’ll likely pay one month’s dues upfront at closing. These fees vary and contribute to maintenance and operational costs.
• Property taxes: As part of closing costs in Iowa, you may be required to prepay a portion of your property taxes at closing.

Seller closing costs in Iowa

The closing costs covered by sellers in Iowa can vary, but here are a few common closing costs that sellers pay for before getting their money:

• Real estate agent commission fees: These fees can be a significant cost for sellers. Commission fees may vary and are subject to negotiation. Sellers should discuss their options with their agent.
• Homeowners Association fees: If the property is part of a homeowners association, sellers are usually responsible for settling any outstanding HOA fees or assessments up to the date of closing. Additionally, sellers may need to provide certain HOA documents to the buyer as part of the sale.
• Property taxes: Any outstanding property taxes will be due at this time. However, if the seller has prepaid property taxes for the period that extends beyond the closing date, they may be credited back for the portion they’ve paid but won’t use.
• Title insurance: Sellers typically cover the cost of the buyer’s owner’s title insurance policy. This policy protects the buyer from any potential title issues that may arise after the property is sold. The cost of title insurance can vary but is generally based on the home’s sale price.
• Transfer taxes: If you’re selling a home in Iowa, you can expect to pay a state levied real estate transfer tax. These taxes are typically calculated based on the sale price or assessed value of the property. The specific rates and regulations can vary widely, so it’s important to be aware of the requirements in your area and factor in these potential costs when selling a home.

Median home sale price data from the Redfin Data Center during July 2024.