Hey neighbors, Todd Kornack here with TK Realty Group at Schuler Bauer Real Estate Services. Buyers and sellers in Shelbyville, Simpsonville and La Grange keep asking me the same money questions. Who pays closing costs? What is this transfer tax? Why so much cash for escrow? Here are plain talk answers, with real numbers from our county clerks.
Who pays closing costs in Kentucky, the buyer or the seller?
Both, but for different things. Buyers usually cover the costs tied to their new loan: lender fees, the appraisal, the lender's title policy, prepaid interest and the start of the escrow account. Sellers usually cover the costs of handing over clean title: the state transfer tax, paying off their existing mortgage, their share of this year's property taxes, and any credits or repairs they agreed to. Here is what many people miss: most of this can be negotiated. A seller can agree to pay part of a buyer's closing costs, and in today's market that request is very much on the table. Just get it in writing in the purchase contract.
What is the Kentucky transfer tax, and how much is it?
Kentucky law puts a real estate transfer tax on the grantor, which is the seller, at 50 cents for every $500 of value. That works out to $1 per $1,000. On a $300,000 sale, that is $300. The county clerk collects it before the deed can be recorded. It is a statewide rate, so it is the same in Shelby County, Oldham County and Frankfort.
There are exemptions, such as transfers between spouses. If you are deeding property within the family, ask an attorney whether one applies.
What does it cost to record the deed and the mortgage?
The Shelby County Clerk and the Oldham County Clerk post the same fee schedule. Recording a deed is $50, plus $3 for each page over five. Recording a mortgage is $80, plus $3 for each page over thirty. Recording the release of a paid off mortgage is $46. Questions? The Shelby County Clerk is at 501 Washington Street in Shelbyville, (502) 633 4410, and the Oldham County Clerk's main office is at 100 West Jefferson Street in La Grange, (502) 222 7645.
How much cash should a buyer plan to bring?
I will not throw out a rule of thumb percentage, because it depends on the loan, the lender, the price and the closing date. Under federal rules, your lender must give you a Loan Estimate within three business days of receiving your application. It shows your estimated closing costs and cash to close. Then, at least three business days before closing, you get a Closing Disclosure with the final figures. Lay the two side by side and ask about anything that changed.
Shop your title insurance, too. The Consumer Financial Protection Bureau notes that most lenders require a lender's policy, that an owner's policy is your choice and protects your investment, and that you can usually shop for the title provider separately.
Why do I have to pay months of taxes and insurance up front?
That is your escrow account. If your loan has one, the lender collects money at closing so your property taxes and homeowners insurance get paid on time. For most mortgages, federal rules limit the extra cushion a lender can require to two months of estimated payments.
Timing matters in Kentucky. Property tax bills go out in the fall, so a closing in November or December puts this year's bill front and center. As I covered in my property tax post earlier this month, that bill gets divided between buyer and seller at closing. And get homeowners insurance quotes early, because the premium can move your monthly payment more than you might expect.
Is there help with closing costs?
Yes. Kentucky Housing Corporation offers down payment assistance of up to $12,500 toward a down payment and closing costs. It is a second loan repaid over 15 years, it is available with a KHC first mortgage, and income and purchase price limits apply. Ask your lender about it before you write an offer.
What about my friends across the river?
Indiana handles transfers its own way, starting with a sales disclosure form filed with the county auditor. If you are weighing Jeffersonville or New Albany against Shelbyville or La Grange, I am happy to lay out both side by side. I am your agent on both sides of the river.
My Take
Closing costs are not a mystery fee. They are a list, and every line can be explained. Buyers, get your Loan Estimate early, shop title insurance and ask for seller help when a home has been sitting. Sellers, budget for the transfer tax, your payoff and your share of the tax bill, and consider whether a closing cost credit could bring you a buyer faster than a price cut.
Want a line by line estimate for a home you are eyeing, or a net sheet for your own house before you list? Call or text me at (502) 232 1915 or email toddtkrealty@gmail.com.
What surprised you most on your last closing statement? Tell me in the comments. I read every one. Todd Kornack TK Realty Group at Schuler Bauer Real Estate Services Read the full post on my website: https://toddsellskentuckiana.huzi.site/blog/closing-costs-shelbyville-la-grange-kentucky/
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