9 Closing Costs Buyers Pay in Michigan

The closing costs buyers pay in Michigan come in nine main groups, and a few of them work differently here than in other states. Michigan sellers pay the transfer tax, and property taxes are billed twice a year.

Here is each cost, what a clear estimate looks like, and the surprise that tends to catch buyers at the closing table.

The nine costs, in short:

1. Lender origination charges and any points
2. Appraisal and other lender-required services
3. The lender's title policy, not the owner's
4. Recording fees for the deed and mortgage
5. Summer and winter property tax prorations
6. The initial escrow deposit and prepaid interest
7. The first year of homeowners insurance
8. Inspections and tests you pay up front
9. HOA or condo dues and transfer charges

1. What lender fees will I pay at closing?

Lender fees are the upfront charges for making the loan, such as an origination or underwriting fee, plus any points you pay to lower the rate. The lender must give you a Loan Estimate within three business days of your application. It must give you a Closing Disclosure at least three business days before closing.

A strong answer is two or three Loan Estimates from different lenders, compared line by line in the origination section. Michigan buyers can ask each lender which fees are fixed and which can still move. Points should come with the rate they buy, so you can judge the trade.

A lender who quotes only the rate and the monthly payment has left out half the picture. So has a Closing Disclosure that shows new fees you never saw on the estimate. Ask about any change in writing before you sign.

2. Who pays for the appraisal and the other lender-required services?

The buyer pays for the appraisal and the other third-party services the lender requires, such as the credit report. The CFPB explains that some of these services are chosen by the lender, so you cannot shop them separately. The appraisal is often paid when it is ordered, then shown on the Closing Disclosure.

A strong estimate lists the appraisal, credit report and any other required services by name, with the fee next to each. Compare these lines across Loan Estimates, since the lender, not you, picks the provider. Ask whether the appraisal was paid up front so it is not counted twice.

A lump sum with no detail behind it is the line to question. Paying for a second appraisal because the loan changed lenders late is the costly version of this item. Settle on a lender early and stay with it.

3. Do buyers pay for title insurance in Michigan?

In Michigan, the buyer customarily pays for the lender's title insurance policy and the seller pays for the owner's policy. Lenders typically require the lender's policy as a condition of the loan. The settlement or closing fee charged by the title company is customarily split equally between buyer and seller.

A strong estimate shows the lender's policy on the buyer's side and the owner's policy on the seller's side, with the closing fee split. Michigan's insurance regulator, DIFS, suggests comparing premiums, discounts, settlement fees and services when you shop for a title company.

An estimate that puts the owner's policy on the buyer without explanation is worth questioning. Custom is not law, so it can be negotiated either way. You just want to know when you are agreeing to pay something the seller usually covers.

4. What are the recording fees for a home purchase in Oakland County, Michigan?

Recording fees pay the county to put the deed and the mortgage on public record. The Oakland County Register of Deeds charges $30 per document, which includes a $4 state survey and remonumentation fee. In Michigan, the buyer customarily pays to record the deed and the mortgage, so a typical financed purchase records two documents.

A strong estimate shows recording fees as a small, specific line under government fees, not a rounded guess. Expect it to match the county's per-document rate. Rochester, Rochester Hills and Oakland Township all record through the Oakland County Register of Deeds.

A recording line far above the county rate is a reason to ask what else got folded in. Recording is a fixed government fee. Title company charges belong on their own lines.

5. How do summer and winter property tax prorations work in Michigan?

Michigan property taxes come in two bills. For most taxpayers, the summer bill becomes a lien in early July and the winter bill on December 1. At closing, the year's taxes are split between buyer and seller by the days each owns the home, and the purchase agreement sets the method.

A strong estimate shows each bill separately: whether it has been paid, by whom, and the credit that results. A buyer closing in August may owe the seller a credit or receive one, depending on who paid the summer bill. File the Principal Residence Exemption affidavit with the assessor by June 1 or November 1.

A proration based on the seller's tax bill alone is the line to check. After a sale, Michigan uncaps the taxable value the following year, so your future bill can be higher. Budget for that bill, not the seller's.

6. How much goes into escrow for taxes and insurance at closing?

Most lenders collect an initial escrow deposit at closing so there is money on hand for the next tax and insurance bills. Federal rules cap the extra cushion at one-sixth of the year's estimated escrow payments. Prepaids also include interest on the loan from the closing date to the end of that month.

A strong estimate shows how many months of taxes and insurance the lender is collecting and why. Because Michigan bills property taxes twice a year, the closing month changes how much goes in. Closing late in the month also means less prepaid interest.

A buyer who budgets only the down payment and lender fees is the one caught short here. The escrow deposit can be a large line, and it is money you still own. Ask for the escrow math before you lock a closing date.

7. Do I pay homeowners insurance at closing in Michigan?

Lenders require homeowners insurance before they fund a loan, and the first year's premium is usually paid at or before closing. It shows up among the prepaid items on the Closing Disclosure. The lender also needs proof of the policy, called the declarations page, before the closing date.

A strong plan shops two or three insurers as soon as the offer is accepted. Ask each for the same coverage so the quotes compare. For an older Michigan home, ask about the roof's age and any water backup coverage, since both can change the price.

Waiting until the week of closing to buy a policy is the slip that delays closings. An insurer may need an inspection or roof photos first. A quote far below the others is worth a second look for what it leaves out.

8. Are home inspections part of my closing costs in Michigan?

Home inspections are a buyer cost, but most are paid when the work is done, weeks before closing. They may not appear on the Closing Disclosure at all. Add-on tests matter in Michigan, where EGLE estimates about 25 percent of homes have elevated radon. Private wells and septic systems need their own checks.

A strong budget lists every inspection by name before the offer goes in: general inspection, radon, and a sewer scope, well test or septic inspection where they apply. In Rochester, Rochester Hills and Oakland Township, where The Delia Group works, the list depends on the house itself.

Leaving inspections out of the cash plan because they are not on the lender's estimate is a common gap. Cutting the radon test to save money is the wrong trade on a Michigan purchase.

9. What HOA or condo fees come due when I buy?

A home in a condo or homeowners association can bring its own costs at closing. These can include prorated dues, a transfer fee, a working capital contribution and a charge for the association's documents. Each association sets its own fees, so there is no standard amount.

A strong answer comes from the association itself: a written statement of current dues, any special assessments and every fee charged at a sale. Ask for it early, along with the budget and the rules. A large assessment already voted is worth knowing before your inspection deadline.

Learning about a special assessment at the closing table is the costly surprise. So is assuming the seller pays every association fee. Who pays which charge is negotiable, so put it in the purchase agreement.

Who Customarily Pays What at a Michigan Closing

Cost	Usually paid by	Note
Lender fees and appraisal	Buyer	Shown on the Loan Estimate
Lender's title policy	Buyer	Required by the lender
Owner's title policy	Seller	Michigan custom
Title closing fee	Split equally	Michigan custom
Recording deed and mortgage	Buyer	$30 per document in Oakland County
State and county transfer tax	Seller	$3.75 plus $0.55 per $500 in Oakland County
Property taxes	Prorated	By days of ownership

Michigan custom, not law. Any of these can be negotiated in the purchase agreement.

Frequently Asked Questions

Who pays most of the closing costs?

In a Michigan purchase with a loan, the buyer usually pays most of the loan costs: lender fees, the appraisal, the lender's title policy, recording fees and the escrow deposit. The seller customarily pays the transfer tax and the owner's title policy. The title company's closing fee is customarily split.

Who pays transfer tax in Michigan, buyer or seller?

The seller pays Michigan's transfer tax. In Oakland County that is $3.75 per $500 of value to the state and $0.55 per $500 to the county, about 0.86 percent combined. Buyers do not see it on their side of the Closing Disclosure.

Can closing costs be paid by the seller?

Yes, a seller can agree to pay part of a buyer's closing costs, and the terms go in the purchase agreement. Fannie Mae caps these contributions on a primary home at 3 percent when the loan is more than 90 percent of the value, with higher caps for bigger down payments. Buyers comparing the best real estate agents in Rochester can ask how a credit affects the offer.

What does "cash to close" mean when buying a house?

Cash to close is the actual amount you bring to closing. It combines your down payment and closing costs, minus the earnest money and any credits already applied. The final figure appears on the Closing Disclosure, which the lender must give you at least three business days before closing.

How to avoid uncapping property taxes in Michigan?

On a normal sale, a buyer cannot avoid it. Michigan uncaps a home's taxable value in the year after a transfer of ownership, which resets it to the state equalized value. File the Property Transfer Affidavit within 45 days and the Principal Residence Exemption affidavit on time, then budget for the higher bill.

Talk to The Delia Group about your closing costs

The Delia Group is a Rochester, Michigan real estate team working with buyers and sellers in Rochester, Rochester Hills, Oakland Township and across Oakland County. Buyers can work through these nine costs, including the summer and winter tax split, before writing an offer. Buyers comparing Rochester realtors can start there.

This article is general information for Michigan homebuyers, not legal or tax advice. Property tax, transfer tax and recording rules can change, and your purchase agreement and loan terms decide who pays what. Confirm your own situation with a real estate attorney or a tax professional.