Understanding Closing Costs

Most Las Vegas buyers with a loan pay about 2 to 3% of the purchase price in closing costs, on top of the down payment, and cash buyers pay much less. In Clark County the seller customarily pays the transfer tax and the owner's title policy, which keeps the buyer's share lower than in many states. Before you make an offer, know what to expect at the finish line. Here is exactly what buyers pay at closing in Las Vegas, and how to plan for it.

Closing costs are the fees and expenses you pay to finish the purchase, separate from your down payment. They cover everything from your lender processing the loan to the county recording the deed.

In Las Vegas, buyers typically pay between 2% and 3% of the purchase price in closing costs. On a $700,000 home in Southern Highlands, that is roughly $14,000 to $21,000 at the most, and often less when you pay no discount points.

The good news: you will receive a Loan Estimate within three business days of applying for a mortgage, and a Closing Disclosure at least three business days before closing, so you will never walk in blind.

Closing costs are not one big mystery fee. They are a set of specific charges from your lender, the title and escrow company, the county, and prepaid bills. Here is what each one covers.

Mortgage and lender fees

These are fees your lender charges to process, underwrite, and fund your loan. The origination fee is often the largest single line item, and these fees vary the most from lender to lender.

• Loan origination fee (up to about 1% of the loan amount)
• Discount points, if you choose to buy down your rate
• Appraisal fee ($500 to $900, more on large or unusual homes)
• Credit report fee ($25 to $75)
• Underwriting fee ($400 to $900)

Title and escrow fees

Title insurance protects against ownership problems that come up after closing. Escrow fees pay the neutral company that runs the transaction. In Clark County, the buyer customarily pays the lender's title policy and half the escrow fee, and the seller pays the owner's title policy.

• Lender's title insurance policy (required by your lender)
• Your half of the escrow or settlement fee
• Loan-related title and escrow charges

Prepaid items

These are not fees. They are costs you pay in advance so the home is covered from day one, and lenders require them.

• Property tax reserves for your escrow account (a few months)
• Homeowners insurance, usually the first full year
• Prepaid interest, from closing to the end of that month
• HOA dues prorated to the closing date, if the home has an HOA

Government and recording fees

The Clark County Recorder charges a recording fee for each document, such as the deed and your deed of trust. These are among the smallest items on your disclosure. The Nevada real property transfer tax is $2.55 per $500 of value in Clark County, and by local custom the seller pays it.

On a $700,000 purchase in Southern Highlands with 20% down and a $560,000 conventional loan, the buyer's side usually looks like this. It is a sample, not a quote. Actual amounts vary by lender, title company, loan type, and closing date.

• Lender fees (origination, underwriting, credit report): about $3,000 to $6,500, less if your lender charges a flat fee
• Appraisal: $500 to $900
• Lender's title policy: about $1,000 to $2,000
• Your half of the escrow fee: about $400 to $750
• Recording fees: usually a few hundred dollars or less
• Prepaids (insurance, tax reserves, prepaid interest): about $3,000 to $7,000, depending on your insurance and the day of the month you close
• HOA charges such as a transfer fee or capital contribution, if the contract assigns them to you

Add discount points if you buy down your rate. Most buyers land between $10,000 and $21,000 on a home at this price.

Who pays what in Clark County?

By long local custom, the seller pays the owner's title policy, the real property transfer tax, half the escrow fee, and the HOA resale package. The buyer pays the lender's fees, the appraisal, the lender's title policy, half the escrow fee, and the prepaids. Custom is only a starting point. The Las Vegas purchase agreement has a line for each of these, and any of them can be negotiated.

Closing costs are not entirely fixed. Here are three ways experienced buyers lower the amount due at the table.

Negotiate a seller credit

In the right market, you can ask the seller to pay part of your closing costs as part of your offer. We negotiate this often on Southern Highlands transactions. It is a legitimate and common strategy, and your loan program sets a cap on how much the seller can contribute.

Shop your lender

Origination fees, underwriting fees, and rate points vary a lot between lenders. Getting two or three Loan Estimates before you commit can save you thousands, even on luxury purchases.

Close near month end

Prepaid interest runs from your closing date to the end of that month. Closing near the end of the month means fewer days of prepaid interest to pay up front, a small but real savings.