Buyer Closing Costs in St. Louis: What You'll Actually Pay

What Closing Costs Actually Are

Closing costs are the fees and prepaid expenses required to complete a real estate transaction. They are separate from your down payment. They are paid at the closing table -- or, more accurately, they are wired in advance as part of the total cash to close.

In St. Louis, buyers typically pay 2% to 3% of the purchase price in closing costs. On a $250,000 home, that is $5,000 to $7,500 on top of whatever down payment you are making. This number surprises many buyers who only planned for the down payment.

Lender Fees

These are fees charged by your mortgage lender for originating and processing the loan:

• Origination fee: Some lenders charge 0.5% to 1% of the loan amount as an origination fee. Others charge it as a flat fee or roll it into the rate. Compare lenders on their total fee structure, not just the interest rate.
• Underwriting fee: $400 to $900 -- covers the cost of underwriting your loan application.
• Application fee: $0 to $500 -- some lenders charge, many do not. Ask upfront.
• Credit report fee: $25 to $75 -- the cost of pulling your credit report.
• Discount points: Optional. One point equals 1% of the loan amount and typically reduces your interest rate by 0.25%. Worth calculating if you plan to stay in the home long-term.

Title and Settlement Fees

These fees are paid to the title company that manages the closing and insures the title:

• Title search: $150 to $400 -- the cost of searching public records to confirm clear title.
• Lender's title insurance: Required by your lender. Cost varies by loan amount -- approximately $500 to $1,000 on a $250,000 loan.
• Owner's title insurance: Optional but recommended. Protects you against title defects not caught in the search. Approximately $400 to $800 on a $250,000 purchase. Worth it in a market with significant older housing stock and complex title histories.
• Settlement/closing fee: $400 to $800 -- the title company's fee for managing the closing itself.
• Recording fees: $100 to $200 -- charged by the county to record the deed and mortgage.

Prepaid Items

These are not fees -- they are expenses you would pay regardless, collected upfront at closing:

• Prepaid interest: Interest from your closing date to the end of the month. Closing on the 1st of the month means almost a full month of prepaid interest. Closing on the 28th means two or three days. On a $250,000 loan at 6%, that is approximately $41 per day -- timing your closing date strategically can save a few hundred dollars.
• First year homeowner's insurance: $1,200 to $2,400 in St. Louis depending on the home and coverage level -- paid upfront at closing.
• Escrow account deposit: Your lender will collect two to three months of property taxes and two months of insurance as an initial escrow deposit. In a high-tax St. Louis zip code, this can be $1,500 to $3,000.

Government and Transfer Fees

Missouri does not have a transfer tax on residential real estate -- unlike many states. This is a meaningful savings. The primary government fees at closing are the recording fees noted above.

Can the Seller Pay My Closing Costs?

Yes -- and this is a negotiating tool that is worth understanding before you make any offer. Sellers can offer closing cost concessions in the purchase contract. The concession is listed as a dollar amount or percentage that the seller will credit toward your closing costs.

FHA loans allow seller concessions up to 6% of the purchase price. Conventional loans allow up to 3% with less than 10% down, and up to 6% with 10% or more down. The concession reduces the net proceeds the seller receives -- which is why it is a negotiating point, not a guarantee.

In a buyer-favorable market or on a home that has been sitting, asking for seller concessions toward closing costs is reasonable and common. In a competitive multiple-offer situation, asking for concessions may cost you the deal.