Wondering who pays what when you close on a home in Minneapolis? You are not alone. Closing costs include several fees and prepaid items, and the split between buyer and seller can feel confusing. This guide breaks down typical costs in Hennepin County, what is negotiable, and how to budget with confidence. Let’s dive in.
What closing costs cover
Closing costs are the fees, taxes, and prepaids due when you finalize a home sale. They pay for services like title work and the loan, government charges to record documents, and prorations for items like property taxes and HOA dues. Your down payment is separate from closing costs.
Most items follow local custom, but many are negotiable. The purchase agreement decides the final allocation, so always review your contract and your settlement statement before you sign.
Who pays what in Minneapolis
Customs in Minneapolis are well established, yet you can negotiate many line items. Use these norms as a starting point.
Title and escrow
- Owner’s title insurance: Protects your ownership. In Minnesota this is negotiable and often decided in the contract. Confirm local practice with your title company.
- Lender’s title insurance: Protects the lender when you finance. The buyer typically pays this.
- Title search, settlement, and closing fees: These administrative charges can be paid by the buyer, the seller, or split. It depends on the title company and the contract.
Lender and loan-related fees (buyer)
- Origination, application, underwriting, and processing fees: Typically buyer-paid unless you negotiate seller credits.
- Discount points: Optional buyer cost to lower the interest rate. These can be part of a negotiated seller concession.
- Appraisal and credit report: Usually buyer-paid since the lender requires them.
Government recording and taxes
- Recording fees: The county charges to record the deed, mortgage, and related documents. Buyers typically pay to record the mortgage. Deed recording can be buyer or seller, depending on the contract. Hennepin County sets these fees, so verify the current schedule before closing.
- State deed and mortgage-related taxes: Minnesota imposes state-level documentary taxes and a mortgage registry fee in many transactions. Who pays can vary by contract and program rules. Your title company and lender will confirm what applies.
Prorations and payoffs
- Property taxes: Prorated so the buyer pays from the closing date forward. The seller is credited for the period owned. Minnesota’s tax timelines and payment schedules affect the proration math, so your title company will calculate the final figures.
- HOA or condo dues: Prorated based on the association’s billing cycle. Some properties charge an HOA transfer or move-in fee. The contract decides who pays.
- Utilities and municipal charges: Sellers usually settle these through the closing date, with any special assessments handled per the title commitment and municipal records.
Real estate broker commissions
- Commission: Usually the largest seller expense and paid from the seller’s proceeds. The listing agreement sets the percentage and how it is shared.
Inspections, repairs, and credits
- Inspections: Home, pest, radon, and sewer scope are commonly buyer-paid.
- Repairs and credits: If issues arise, the seller may agree to repair items or provide a credit. These are negotiated in the purchase agreement.
- Repair holdbacks: Sometimes funds are held in escrow if work must be finished after closing.
Prepaids and escrow deposits (buyer)
- Homeowner’s insurance: Most lenders require the first year paid at closing.
- Initial escrow deposits: Funds for the lender’s escrow account to cover property taxes and insurance.
- Daily interest: Mortgage interest from funding through the end of the month.
City or program-specific items
- Municipal certificates or compliance documents: If required by the City of Minneapolis or a neighborhood program, these may carry fees. Payment can be buyer or seller per the contract.
- Government loan programs: FHA, VA, and other programs can change fee names, caps, or who may pay certain costs. Your lender will outline these rules.
How much to budget
Every transaction is unique, but you can plan within common ranges.
- Buyers: Closing costs commonly total about 2% to 5% of the purchase price. This includes lender fees, title charges, recording, prepaids, and initial escrow deposits. Your loan type and down payment will influence the final amount.
- Sellers: The largest cost is usually the real estate commission, plus any mortgage payoff, prorated taxes, and seller-side closing fees. Many sellers see total costs exceed 5% to 6% of the sale price mainly because of commissions, though totals vary.
Common line-item ranges to expect (verify for your property):
- Home inspection: commonly a few hundred dollars, often around 300 to 600 dollars depending on property size and scope.
- Appraisal: generally a few hundred dollars, often around 400 to 900 dollars depending on loan type and complexity.
- Title and settlement fees: several hundred to low thousands based on the provider and transaction details.
- Owner’s title insurance: one-time premium based on price. It is often the largest title-related cost.
- Recording fees: modest per document (tens to low hundreds) and set by the county.
Buyer cash-to-close checklist
Use this quick list to avoid surprises.
- Down payment (separate from closing costs)
- Lender fees: origination, underwriting, processing, application
- Appraisal and credit report
- Title charges: lender’s policy, share of settlement or closing fee, title search
- Recording fees for the mortgage and possibly deed, per contract
- State deed tax and mortgage registry fee if applicable
- Prepaids: homeowner’s insurance, interest, and initial escrow deposits for taxes and insurance
- Inspections: home, pest, radon, sewer scope if desired
- Courier, wire, or notary fees if charged
Seller net sheet essentials
Before listing, sketch a conservative estimate of your net proceeds.
- Real estate commission per your listing agreement
- Mortgage payoff(s) and any home equity line payoff
- Seller-side title or closing fees if applicable
- Prorated property taxes and HOA dues
- Agreed repairs or seller credits
- Municipal fees or certificates if required
Timeline and required disclosures
Closing numbers evolve as underwriting and title work progress. Plan for these milestones.
Loan Estimate and Closing Disclosure
- Within three business days of a completed loan application, your lender must provide a Loan Estimate that outlines projected fees and terms.
- At least three business days before you sign closing documents, your lender must deliver a Closing Disclosure that details final costs. Review it carefully and ask questions early.
Title search and commitment
- The title company issues a title commitment listing any exceptions and items that must be cleared. Review for liens, easements, and assessments.
- If issues appear, your agent and title team will coordinate cures before closing.
Final numbers and proration
- Payoffs and prorations are calculated near the closing date to ensure accuracy.
- Your title company will provide a settlement statement that shows every charge and credit for buyer and seller.
Negotiation tips that work
Closing costs are about more than “who pays.” They are a tool for crafting a workable deal.
- Ask for seller credits when rate buydowns or cash-to-close are tight. Lender limits apply, so confirm caps with your loan officer.
- Trade price for costs. A slightly higher price with a seller credit can meet both parties’ goals if the appraisal supports it.
- Decide on the owner’s title policy early. In Minnesota it is negotiable, so set expectations in your offer.
- Use inspection findings to request targeted repairs or a credit, rather than reopening every line item.
- Confirm HOA transfer or move-in fees upfront so they do not derail final numbers.
Where to verify current fees
Because some fees change, verify details with trusted local sources.
- Hennepin County Recorder for recording fees and procedures
- Minnesota Department of Revenue for deed tax, mortgage registry fees, and exemptions
- City of Minneapolis for assessments and any required municipal certificates
- Your lender for current loan program fees and prepaids
- Your title company for title premiums, settlement fees, and local customs on who pays which item
- Local Realtor association resources for common practices and negotiation norms
Ready to plan your closing?
If you want a clear, line-by-line estimate based on your property and loan, let’s talk. With steady guidance from search to signing, you can move forward with confidence. Schedule a conversation with Renée Wilson to map your numbers and next steps.
FAQs
In Minneapolis, who usually pays the owner’s title policy?
- In Minnesota it is negotiable and set by the purchase agreement, so either party may pay based on local custom and the contract.
What are typical buyer closing costs in Minnesota?
- Buyers commonly budget about 2% to 5% of the purchase price, including lender fees, title, recording, prepaids, and initial escrow deposits.
How are property taxes handled at closing in Hennepin County?
- Taxes are prorated so the buyer pays from the closing date forward and the seller is credited for time owned, with final math set by current tax schedules.
Can a buyer ask the seller to pay closing costs in Minneapolis?
- Yes, you can negotiate seller credits or specific fees, subject to lender limits and the terms agreed in the purchase agreement.
What is the difference between prepaids and closing costs for buyers?
- Closing costs are fees for services and administration, while prepaids fund upcoming obligations like insurance, taxes, and daily interest.
When will I see my final numbers before closing?
- Your lender must provide a Closing Disclosure at least three business days before signing, and the title company will deliver a final settlement statement near closing.
Who pays recording fees and state taxes in a Minneapolis home sale?
- Buyers typically pay to record the mortgage, deed recording can be buyer or seller, and state deed and mortgage-related taxes are allocated by contract and program rules.
