The Nashville Homebuyer's Complete Guide to Closing Costs

Understanding closing costs is crucial for budgeting your Nashville home purchase. Don't let surprise fees catch you off guard - here's everything you need to know.

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What Are Closing Costs?

Closing costs are the additional expenses you'll pay beyond your down payment to finalize your home purchase. In Nashville, these costs typically range from 2% to 3% of your loan amount and cover all the services and fees needed to complete your transaction.

The Closing Costs Math

Closing Costs + Down Payment - Earnest Money = What You Bring to Closing

Simple as that!

Your Closing Costs Breakdown

🏦

Lender Fees

Getting Your Loan Approved

• Processing & underwriting charges - Getting your loan approved
• Application fee - Starting the process
• Credit check fee - Verifying your creditworthiness
• Origination fee - Administrative costs

🔍

Inspections

Upfront Expenses

• Appraisal - Confirming the home's value
• Home inspection - Checking the property condition
• Specialty inspections - Pest, radon, roof, pool, survey

Important: These are non-refundable and paid when services are performed

📋

Title Work

Title Company Charges

• Title search fee - Researching property ownership history
• Attorney/closing fee - Legal document preparation
• Title insurance - Protecting your ownership rights

Nashville Tip: In Davidson County, sellers often pay title insurance for resale homes (but it's always negotiable!). For new construction or foreclosures, buyers usually cover this cost. In competitive offer situations, it's a smart strategy for buyers to pay for their own policy.

Our Recommendation: We love closing with Rudy Title - they even have a handy title insurance calculator on their website!

💼

Escrow

Escrow Account Setup

Your lender will collect money upfront to pay future bills:

• Property taxes - Prorated for your ownership period
• Homeowners insurance - First year's premium plus reserves
• Reserve cushion - Several months of future payments

How it works: Your lender adds 1/12th of annual taxes and insurance to your monthly mortgage payment, then pays these bills when they're due.

🏛️

Government

Government Fees

• Tennessee stamp tax - State transaction fee
• Register of Deeds - Filing your ownership documents
• Recording fees - Making it official

Smart Money Moves

🔵 Points: Buying Down Your Rate

• 1 point = 1% of loan amount
• Typically reduces your interest rate by 1/8th to 1/4th
• Great if you're planning to stay long-term!

🎁 Seller-Paid Closing Costs

• Negotiable but subject to loan program limits
• Can significantly reduce what you bring to closing
• Especially helpful in buyer-friendly markets

🔄 Lender Credits

• Some lenders will cover certain closing costs
• Trade-off: You'll get a slightly higher interest rate
• Sometimes worth it for cash flow reasons

💸 Your Earnest Money

• Usually 1% of purchase price
• Applied toward closing costs (not extra!)
• Refundable if you withdraw due to contingencies

2024-2025 Update: Buyer Agent Compensation

Starting August 2024, big changes hit Nashville real estate! Listing agents can no longer advertise seller-paid buyer agent compensation. This means:

• Buyer agent fees are now a negotiation point in your offer.
•You may need to budget for a portion of your agent's compensation if the seller does not cover it, though we've been able to negotiate fair payment of our services through seller concessions in all transactions thus far.

Need Help with Your Nashville Closing?

Questions? We're here to help you navigate every step of the closing process. We love helping Nashville homebuyers succeed and avoid surprise fees!

Call (615) 751-8913 Email Us

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