Utah closing costs, explained

Closing costs are the one-time charges that make the sale actually happen — title work, escrow, recording, lender fees, prorated taxes and the like. Buyers and sellers each have their own list. Buyers usually pay the costs their loan creates; sellers usually pay the costs of clearing and transferring what they own.

There is no single percentage that tells you your number, and the percentages you will find quoted online are mostly measuring something else. What follows is the actual list of line items, what each one is for, and how to get a figure for your own transaction.

What "closing costs" actually means

"Closing costs" is a bucket, not a fee. It covers every charge that appears on the settlement statement other than the price of the house itself and the mortgage principal. Roughly, the bucket holds five kinds of thing:

1. Title charges — the title search and examination, and the title insurance premiums.
2. Escrow and settlement charges — the cost of the closing itself: holding the funds, preparing the statement, conducting the signing, disbursing and recording.
3. Recording and government charges — what the county charges to record the deed and the trust deed.
4. Lender charges — origination, appraisal, credit report, and whatever else the loan requires. These exist only when there is a loan.
5. Prorated and prepaid items — property taxes, HOA dues, insurance and interest, divided between the parties according to the calendar rather than according to fault.

Only the first three have much to do with the title company. The largest single line on a seller's statement is usually the real estate commission, and the largest group on a buyer's is usually the lender's charges plus prepaid items.

What buyers usually pay

The buyer's list is dominated by the loan. A cash buyer's closing costs are a small fraction of a financed buyer's, because most of the list above simply does not exist without a lender.

What sellers usually pay

A seller's statement is usually shorter than a buyer's and larger, because the payoff and the commission are both on it.

The percentage figures, and why to be careful with them

Search for Utah closing costs and you will quickly meet a pair of numbers: sellers pay 8 to 10 percent of the sale price, buyers pay 2 to 5 percent. Those figures circulate very widely. Treat them carefully, for three reasons.

The seller figure is mostly commission. The large majority of that 8 to 10 percent is the real estate commission, which is negotiable, has been changing, and is not a closing cost in the sense most people mean when they ask this question. Strip the commission out and the seller's remaining costs look completely different.

A percentage of the price is the wrong shape for most of the list. Recording charges do not scale with the sale price. Neither does the settlement fee, or the appraisal, or the credit report. Applying one percentage to all of it overstates the cost on an expensive house and understates it on a cheap one.

The prorations depend on your date, not your price. Closing in early November is a materially different property tax proration from closing in February, on the same house, at the same price.

We are naming these figures rather than repeating them because they are the first thing most people find, and knowing what they include is more useful than another restatement of them.

Prorations: the part nobody expects

A proration is not a fee. It is a division of something that was always going to be owed, split at the closing date so each party carries their own share of the calendar.

Property taxes. Utah property taxes are billed late in the calendar year for that year. That means a sale closing in, say, June involves a tax bill that has not been issued yet, for a year both parties will have owned part of. The closing handles it by crediting the buyer with the seller's share, and the buyer pays the whole bill when it arrives. The result on the statement can look odd — a credit to the buyer rather than a charge to anyone — but the arithmetic is simply "who owned it for how long".

HOA dues. Same principle, usually monthly or quarterly rather than annual, and usually smaller.

Mortgage interest. Mortgage interest is paid in arrears, so a seller's payoff includes interest up to the payoff date, and a buyer prepays interest from closing to the end of that month.

Prorations are the most common source of "why is this on my statement?" at the signing table, and they are also the easiest thing for an escrow officer to walk you through. Ask.

Which costs are negotiable

More of them than people assume, in three different senses.

Negotiable between the parties. Who pays a given line is a contract term. Seller concessions, a buyer covering the owner's policy in a competitive market, a split of the settlement fee that is not fifty-fifty — all normal.

Negotiable with the provider. Lender charges vary between lenders, and the loan estimate exists so you can compare them. You can also choose your title agency rather than accepting a referral by default.

Not negotiable at all. County recording charges are set by the county. Taxes are taxes. Title insurance premiums in Utah are filed rather than quoted freehand, so the premium for a given coverage amount is not a haggling point, though the choice of policy and endorsements is.

Knowing which bucket a line falls into saves everyone a conversation.

Getting a real number for your sale

The only number that matters is the one for your address, your price, your closing date and your contract. Three ways to get it:

Ask for an estimate before you are under contract. We can produce a net sheet for a seller or an estimate for a buyer from the price, the target closing date and the loan type. It is not a commitment and it is not a credit check.

Read your Loan Estimate and Closing Disclosure. If you are borrowing, your lender is required to give you both, and they itemise everything the loan costs. The Closing Disclosure and the settlement statement should tell the same story; if they do not, ask before you sign.

Use the tools. We publish free tools, including the buyer net sheet in the Title One app, which will give you a worked figure rather than a percentage.

Whatever route you take, get the estimate early. Closing costs are one of the few parts of a transaction that are entirely predictable in advance, and the only reason they surprise anyone is that nobody asked in week one.

Questions we get asked

Are closing costs due at closing, or before?

Your funds need to be in escrow and cleared before closing can disburse, so "at closing" in practice means "wired a day or two ahead". Your escrow officer will tell you the deadline for your file. See what happens at your closing appointment.

Can closing costs be rolled into the loan?

Sometimes, depending on the loan programme and the appraisal. That is a question for your lender, not for the title company.

Do I pay closing costs on a refinance?

Yes, though the list is shorter and there is no commission and no owner's policy. See Utah refinance closings.

Why is the title company's fee separate from the title insurance?

Because they are two different things. The premium buys a policy from an underwriter. The settlement or escrow fee pays for the work of closing — holding funds, clearing the file, running the signing, disbursing and recording.

Who decides what I pay?

Your contract, for anything allocated between the parties. The provider, for their own charges. The county, for recording. Nobody at the closing table invents a number on the day.

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Want the real figure for your transaction? Call +1 (801) 266-0606 or send us the address and the target closing date and we will put an estimate together.