Sticker shock at the closing table can take the shine off your new Ann Arbor home. If you are a first-time or relocating buyer, it is easy to confuse closing costs with the down payment, or to underestimate how much cash you will actually need. The good news is you can plan ahead, compare options, and often reduce what you pay out of pocket. In this guide, you will learn what closing costs include, typical ranges in Washtenaw County, a clear example for a $400,000 home, and practical ways to save. Let’s dive in.
What Ann Arbor buyer closing costs include
Closing costs are the third-party fees, prepaid items, taxes, and lender charges due at or before closing, separate from your down payment. Buyers commonly pay about 2% to 5% of the purchase price in closing costs, depending on loan type, price point, and local practices. You will receive a final Closing Disclosure from your lender at least 3 business days before closing that lists every cost. Use it to confirm there are no surprises.
Loan fees
- Origination or lender processing fee. Often 0.5% to 1.5% of the loan amount, sometimes a flat fee.
- Application, processing, and underwriting. Commonly $300 to $1,500 in total, depending on the lender.
- Credit report. Usually $25 to $50.
- Rate-lock or float-down fee. Varies by lender and may be included in other fees.
Third-party services
- Appraisal. Typical in Michigan is $400 to $700, higher for complex properties.
- Home inspection. Often $300 to $600 and usually paid at time of service.
- Pest inspection. Usually $75 to $200 if required by the lender or requested by you.
- Survey. Often $300 to $1,000 based on lot size and complexity.
Title and settlement
- Title search and exam. Often $200 to $600 to verify ownership history.
- Lender’s title insurance. Required with a mortgage, price varies by coverage and purchase price.
- Owner’s title insurance. Optional but strongly recommended, a one-time premium and negotiable in who pays.
- Closing or settlement fee. Typically $300 to $800 for the closing agent’s services.
- Recording fees. Paid to the county to record the deed and mortgage, usually $40 to $200.
Prepaid items and escrows
- Property taxes and homeowner’s insurance. Your lender may collect several months to set up your escrow account. Amounts depend on tax schedules and insurance premiums.
- Prepaid interest. Covers interest from funding through your first payment date and depends on your closing date and rate.
- HOA dues or assessments. Prorations or upfront fees if the property is in an HOA.
Taxes and transfer charges
- State or local transfer taxes and special assessments. Amounts vary by jurisdiction and are influenced by local rules and negotiations.
- Municipal charges and prorations. Outstanding city or district amounts can be prorated at closing.
Other small fees
- Wire transfer or bank fees. Often $25 to $50. Always confirm wiring instructions by phone with the title company to prevent fraud.
- Notary or courier. Usually under $100 each.
Ann Arbor and Washtenaw County specifics
Property taxes in Washtenaw County are assessed by the county and collected by local treasurers, such as the City of Ann Arbor or your township. The billing schedule and escrow requirements can affect how much you prepay at closing. If the seller has already paid a bill, you may reimburse them through a proration, which can increase your cash due at closing.
Recording fees are set by the Washtenaw County Register of Deeds and can vary by the number of documents. If your purchase is within the City of Ann Arbor, confirm any local assessments or special district charges. Sidewalk, curbing, or sewer improvements may appear as special assessments and can be settled at closing or transfer to you in future years.
Who pays for the owner’s title policy or transfer taxes can vary locally and is negotiable. Ask your title company and agent what is typical for your specific offer strategy, since customs can shift with market conditions.
If your property has any University of Michigan related disclosures or zoning overlays, your title company or agent may provide special addenda. Confirm early to avoid delays or extra costs late in the process.
Example estimate for a $400,000 Ann Arbor home
Here is an illustrative scenario for a $400,000 purchase with 20% down and a conventional loan. Actual figures will vary by lender and property, but this shows a practical midpoint.
- Lender fees and origination at 0.75%: $2,400
- Appraisal: $550
- Credit, application, and admin: $500
- Title search, lender’s title insurance, and closing fee: $1,500
- Recording and county charges: $150
- Prepaid homeowner’s insurance: $1,200
- Property tax escrow setup: $1,000
- Prepaid interest for a couple of weeks: $400
- Miscellaneous, including wire and courier: $300
Estimated total closing costs: $8,000 to $9,000. This sits within the broader 2% to 5% range, or $8,000 to $20,000 for a $400,000 price point. Any seller concessions, lender credits, or adjustments to prepaid items can change your final cash to close.
How to lower your cash to close
- Shop multiple lenders. Request Loan Estimates and compare origination fees, rates, and any points or credits. Small changes in fees or rate can save thousands.
- Negotiate seller concessions. In some cases, the seller may agree to cover a portion of your closing costs. Limits depend on loan program and the local market.
- Consider lender credits. Some lenders offer credits in exchange for a slightly higher interest rate. This can reduce out-of-pocket costs now.
- Ask which fees are flexible. Some title, settlement, or courier fees may be reduced.
- Explore assistance programs. State and local programs can provide grants or low-interest loans for down payment or closing costs. Check options available to Michigan buyers and Washtenaw County residents.
- Close later in the month. This can reduce prepaid interest, which covers the period between funding and your first mortgage payment.
- If allowed, roll some costs into the loan. This can raise your monthly payment and total interest, so weigh the tradeoffs.
Timeline, documents, and a quick checklist
Most financed purchases close within 30 to 45 days after your offer is accepted. Your lender must deliver the final Closing Disclosure at least 3 business days before you sign. Compare it line by line against your initial Loan Estimate and ask questions before closing day.
Bring a government photo ID, your homeowner’s insurance binder, and proof of funds. If you are wiring money, call the title company using a verified phone number to confirm instructions. Do not rely only on email for routing numbers.
Quick checklist:
- Review your Loan Estimate and shop competing quotes within a few days.
- Schedule appraisal, inspection, and any required surveys early.
- Confirm tax bills, escrow setup, and any special assessments specific to Ann Arbor.
- Verify who pays for owner’s title insurance and transfer taxes in your contract.
- Read your Closing Disclosure carefully and confirm any changes with your lender.
- Call the title company to confirm wire instructions before sending funds.
Who usually pays what in Ann Arbor
Payment customs can vary and are negotiable. In many Michigan transactions, items like the owner’s title policy or transfer taxes may be paid by either side depending on the deal. Your agent and title company can tell you what is common for your price point and property type, then position your offer or counteroffer accordingly.
Review your Closing Disclosure with care
Your Closing Disclosure shows your final loan terms, interest rate, monthly payment, and all closing costs. Review it as soon as you receive it, at least 3 business days before closing. Focus on origination charges, lender credits, title fees, escrows for taxes and insurance, and any changes from your Loan Estimate. Ask your lender and title company to explain anything that is unclear so you can sign with confidence.
Ready for local guidance?
If you want a clear estimate tailored to your Ann Arbor purchase, a side-by-side lender comparison, or help structuring seller concessions, you are not alone. Work with a local advisor who handles these details every day and aligns your strategy with the Washtenaw County market. To talk through your goals in English or Farsi, schedule time with Kamran Boushehri.
FAQs
How much do Ann Arbor buyers typically pay at closing?
- Buyers often pay about 2% to 5% of the purchase price in closing costs, separate from the down payment, with actual amounts based on loan type, price point, and local fees.
What are the biggest closing cost line items for buyers?
- Common larger items include lender origination fees, appraisal, title and settlement services, lender’s title insurance, recording fees, and prepaid escrows for taxes and homeowner’s insurance.
When do I get my Closing Disclosure and what should I check?
- Your lender must provide it at least 3 business days before closing, and you should compare it to your Loan Estimate and verify lender fees, title charges, escrows, and any credits.
Who pays for owner’s title insurance and transfer taxes in Washtenaw County?
- It is negotiable and can vary by transaction, so ask your agent and title company what is currently common in Ann Arbor and structure your offer accordingly.
How do property tax prorations work in Ann Arbor?
- Taxes are assessed by Washtenaw County and collected by local treasurers, so if the seller prepaid or a bill is due soon, your closing may include prorations that increase your cash to close.
Are there programs that help with closing costs in Michigan?
- State and local programs can provide down payment or closing cost assistance for eligible buyers, including first-time buyers, so check options that apply in Washtenaw County.
How can I avoid wire fraud when sending closing funds?
- Always call the title company at a verified phone number to confirm wiring instructions, never rely only on email, and confirm the account name and routing details before sending funds.
