Let’s take a look at some of the most common closing fees in Indiana, along with the state-specific information you’ll need to know:
Loan Origination Fees
Obtaining a mortgage is not without cost. Unless you have enough cash to buy your new house outright, the first stop you’ll make will be to your lender, where loan origination costs will be the initial charge. This fee covers all administrative costs incurred by your lender, from the initial setup of your loan application to the processing of funds at closing.
Loan origination fees typically range from 0.5 percent to 1 percent of the loan amount.
Credit Report Fee
Before making a loan offer, your lender must examine your credit score during the screening process. They’ll do a complete background check on you, which will entail requesting your credit report from the various credit bureaus in order to have a better understanding of how you’ve handled previous problems.
You can expect the lender to pass the cost on to you. Your lender will need to pull numerous credit reports if there are multiple borrowers on the loan application.
Escrow Fees
Closings in Indiana can be handled by title firms, lenders, real estate agents, and attorneys. You might decide to hire a title firm or an escrow agent to help you with the procedure.
Between you and the seller or homebuilder, the title firm serves as a neutral third party. In Indiana, buyers and sellers normally divide escrow costs; however, this arrangement may change based on who pays for what during negotiations between the two sides.
The title firm will handle crucial aspects of the closing process, such as ordering a title search, assisting you with title insurance purchases, and ensuring that you close on time and without any issues.
Attorney Fees
While hiring a real estate attorney to assist with legal documents, particularly property transfer documents, is not required in Indiana, you may choose to do so.
Additionally, an attorney can draft your purchase agreement, certify deeds, and examine your homeowner’s and title insurance policies. If your property acquisition is complicated, your real estate agent or title firm may advise you to engage a lawyer (e.g., buying from outside of the state).
The cost of hiring a real estate attorney in Indiana varies depending on where you live in the state, what you need your lawyer to perform, and how complicated your situation is. Some real estate attorneys bill by the hour, while others bill by the flat fee.
Title Search and Title Insurance
In Indiana, your title and escrow business is likely to order a title search on the property you’re about to purchase. The title search is an important part of the home-buying process; it’s essentially an in-depth examination of the property’s title history to ensure your seller has the legal authority to transfer ownership.
Following the completion of the title search, you’ll need to protect yourself and your lender with title insurance. Both parties are protected by title insurance in the event that there are claims against your property or if something important is overlooked during the search. Your title firm will assist you in obtaining appropriate title insurance that matches the criteria of your lender. Because it’s a one-time cost, the insurance is valid for as long as you own the property.
Real Estate Transfer Tax
Indiana homeowners get a huge break on a major element of the closing expenses process: Only one out of every twelve states does not levy transfer taxes, and Indiana is one of them. State and county real estate transfer taxes are common, but Indiana purchasers and sellers can avoid them entirely.
Property Taxes
Indiana collects an average of 0.88 percent of a property’s annual market value in property taxes, making it one of the lowest-taxed states in the US.
At closing, homebuyers will pay prorated property taxes, which will be paid biannually thereafter. Check your county’s property tax due dates and record them on your calendar.
Homeowner’s Insurance
Lenders usually require that you have a homeowner’s insurance policy in place for at least the first six months when you close. Homeowners insurance is essential because it protects your home from physical damage caused by fire, wind, vandalism, or theft.
Depending on where you reside and what you want to insure, do your homework to ensure you have appropriate coverage.
As a “prepaid” charge, homeowner’s insurance must be paid in cash at closing and cannot be rolled into your mortgage.
Appraisal and Home Inspection
You’ll need to pass a few more checkpoints, including a satisfactory appraisal and house inspection, before your lender decides it’s safe to transfer your home loan.
To begin, a third-party appraiser will be sent to your potential new house by your lender to ensure that it is priced correctly. The appraiser will examine the house, its size, features, and condition to see how it compares to like priced properties in the neighborhood in order to estimate its fair market value. If you can’t keep up with your mortgage payments and default on your loan, your lender will be able to sell the house and collect their losses.
A house inspection serves a distinct purpose. In this situation, an inspector will undertake a complete inspection of the property to ensure that everything, from the foundation to the roof, is in working order. Pay heed to what they have to say: The house inspector will point out any issues that are now present or that may arise in the future. You can use this information to haggle with your seller or request that they make repairs before closing.
Private Mortgage Insurance
If you don’t put down 20%, your lender will need you to purchase private mortgage insurance, or PMI. It allows consumers to qualify for a conventional loan with as little as a 5% to 19.99 percent down payment.
While you pay for the insurance, it is for the benefit of your lender; because you haven’t put down 20%, PMI protects your lender in the event of a loan failure.
PMI normally runs from 0.25 percent to 2.25 percent of your outstanding loan total, depending on the size of your down payment and credit score, and isn’t included in the ClosingCorp tally of closing costs expenditures.
How much is title insurance in Indiana?
Closing costs in Indiana are around 0.8 percent of the home’s final transaction price, not counting broker fees.
Keep in mind that this is just a guess. While closing fees must always be paid, your real estate agent can typically negotiate whether you or the buyer pays them.
Who pays closing costs in Indiana?
Closing costs are shared by both buyers and sellers at the end of a house sale, but they will not pay for the same things. Sellers often pay title and closing fees, as well as owner’s title insurance and recording fees, at closing in Indiana.
Title and closing fees: 0.45%
When you sell your house, you must give the buyer legal possession of the property. Before that, your settlement agent will do a title search to ensure that the property is free of any legal claims.
The settlement agent who handles the search and transfer of your title, as well as other closing services, is compensated by title fees.
In Indiana, the buyer and seller usually pay for their own title firm or closing agent, but this isn’t always the case. If you’re not sure, ask your realtor.
Owner’s title insurance: 0.28%
A buyer is protected by an owner’s title insurance coverage if there is a problem with the title’s previous ownership. This can range from clerical errors in paperwork to full-fledged ownership conflicts. This title insurance policy covers any legal expenditures as well as the cost of reimbursing the value of a home if errors are made.
Owner’s title insurance in Indiana typically costs 0.28 percent of the home’s final sale price, or $569 for a $206,400 home. The rate for your property, however, may differ. In Indiana, title firms frequently employ tiered pricing to decide how much you’ll pay for an insurance based on the value of your home.
In Indiana, an owner’s title insurance coverage is typically covered by the seller, although it’s not uncommon for both parties to haggle who pays this closing expense.
Indiana transfer tax: Varies locally
There is no transfer tax in Indiana when you transfer the title of your house to a new owner. You may, however, be required to pay taxes to your city or county. To find out what taxes you’ll have to pay in your area, talk to your realtor and title company.
Indiana recording fees: $125
For legally documenting a property’s deed and mortgage information, your state or local government charges a fee. In Indiana, expect to pay roughly $125, though you might be able to get the buyer to reimburse the expense.
Property taxes: Varies
Property taxes for the current year may be collected by your county at the end of the year in Indiana. If that’s the case in your location, you’ll have to pay property taxes for the year you held the property at closing. The buyer will not have to pay taxes for the entire year if they only own the property for a few months.
In locations where property taxes are paid at the beginning of the year, the buyer will usually repay you for the remaining months at closing.
Other Indiana closing costs for sellers
Every house sale in Indiana is different, and a large number of them come with unexpected charges. For example, you may need to pay for a new property appraisal on your downtown Indianapolis apartment, or you may need to hire a real estate attorney to vet the sale of your Gary duplex. Whatever your circumstances, you should be prepared to deal with some unexpected costs. The following are a few of the most common:
Your realtor will be able to give you a more accurate estimate of closing costs based on the Indiana community you’re selling in and other considerations.
Is title insurance mandatory in Indiana?
A lender’s policy (sometimes known as a “loan” policy) and an owner’s policy are the two types of title insurance policies to consider.
A lender’s policy protects the lender’s investment by paying the mortgage if the owner/title buyer’s to the property is void due to a title problem. Typically, a lender’s insurance does not cover the entire property value, and the amount of coverage reduces as the mortgage debt drops over time, eventually terminating when the loan is paid off.
An owner’s insurance, which is typically obtained to cover the whole property value, protects the landowner/homeowner against the specific sorts of claims stated in the policy. A lender’s policy is normally required as part of the real estate transaction, but an owner’s policy is frequently optional. An owner’s insurance covers any title loss covered by the policy’s terms, insures the property’s value, and lasts as long as you or your heirs have an ownership interest in the property.
A title insurer must pay for any and all costs connected with defending against title disputes, as well as any fall in land value as a result of their failure, in addition to title loss coverage under a lender or owner insurance. There are no monthly payments for an owner’s policy because you just pay it once, at the end of escrow.
How much are closing costs in Indiana for buyer?
- Closing costs in the District of Columbia are the highest, at nearly $25,000 including taxes.
- Closing expenses account for 4.88 percent of the typical property price in Pennsylvania, the highest of any state.
- Closing costs in Colorado, Wyoming, Montana, and Indiana are less than 1% of the home’s selling price.
What is title insurance in Indiana?
In Indiana, title insurance protects buyers and lenders from financial obligations arising from a title defect or a hidden lien. Lender’s title insurance policies and Owner’s title insurance policies are the two types of Indiana title insurance policies.
Is insurance based on purchase price?
First and foremost, let’s discuss Owner’s Policies. In most cases, the Amount of Insurance for an Owner’s insurance is equal to the property’s purchase price. For instance, if a buyer buys $100,000 for an existing house from a seller, the Amount of Policy will be $100,000. What if, on the other hand, the buyer wishes to make considerable renovations to the property? If the buyer expects to make $50,000 in upgrades to the property, he can get a $150,000 policy, which covers the initial purchase price plus the cost of the immediately planned modifications.
What if the buyer pays $100,000 for the property since it is at the bottom of the market and he feels it will appreciate greatly over the next five years? Then you can ask the title company for a policy that covers you for more than the initial purchase price, usually up to an additional 50% of the value. This type of coverage is typically obtained by obtaining an inflation endorsement, in which the title company agrees to increase the Amount of Insurance under the policy by ten percent per year for the next five years, not to exceed 150 percent of the original Amount of Insurance, in exchange for an additional premium. This type of coverage isn’t offered everywhere, so if you’re interested, make sure to contact your title firm about it.
What if you want to save money and buy a title coverage for less than the property’s purchase price, assuming you’re ready to take a slight risk of loss? Since the premiums and loss reserves are dependent on the fair market value or purchase price of the property to be insured, most state statutes prevent title companies from knowingly providing a policy for less than the purchase price. As a result, this is usually not an option.
What if you inherited the property or acquired it as part of a divorce settlement and want to ensure that the title is correctly transferred to you? The title company will require you to have an appraisal completed by a certified appraiser who has been approved by the title company, and the assessed value will be used to calculate the Amount of Insurance. If the property was previously covered by a title insurance policy, you may be able to put yourself in the shoes of the insured under the prior policy, but keep in mind that property values may have grown after the title policy was issued, and you may need to increase or decrease coverage. The best way to accomplish this is to issue a new policy in the appraised amount. You may be qualified for a discount on your premium, but this is subject to local title insurance requirements, so check with your title company for more information.
What if you’re renting a commercial property for ten years and your annual rental payments are $40,000? Purchasing a title coverage for the current purchase value of the property will typically not be equal to the amount of your lease payments if you want to protect your investment in the lease. Assume the property is valued at $200,000 at the time of your lease. However, if your rent is $40,000 per year for ten years, your total rental payments will be at least $400,000, and may be higher if your lease has built-in cost of living hikes or percentage rents. This is one of the times when you’ll need to speak with the title firm and negotiate a reasonable Amount of Insurance, keeping in mind that the Leasehold Endorsement will offer you with additional coverages that will come in handy if you’re evicted due to a title problem.
Let us now discuss loan policies. A loan policy will be issued in the amount of the lien on the mortgage or deed of trust that is being insured, in most cases. So, if your buyer gets a purchase money mortgage to buy the house with a 90% loan, the mortgage will be for $90,000, and the loan title policy will be prepared in that amount. If the buyer uses the same lender to finance the $50,000 in improvements, the mortgage might be for $140,000, and the title policy would be for that amount.
In business scenarios, there are several types of mortgages that may cause the mortgage amount to increase over the life of the loan, affecting how the Amount of Insurance is calculated. One sort of mortgage allows for future principle advances, thus increasing the debt and mortgage amount. Assume a company wants to mortgage its headquarters in order to obtain additional operating cash to run its operations. The corporation/borrower might get a $10 million loan with the opportunity to get additional $5 million advances in the future, for a total liability of $15 million. A title policy that protects the legality of the lender’s lien up to the full amount of the loan, or up to $15 million, would be ideal. The lender might get endorsements down-dating the policy each time a future advance is given, bringing the total amount of insurance up to the new principle amount. These endorsements necessitate the payment of a higher premium as well as a title search to ensure that the title’s status has not altered.
In other cases, the borrower may be mortgaging multiple properties and utilizing all of his assets as collateral for a blanket mortgage. In this case, we’d be dealing with a blanket mortgage (one mortgage covering multiple properties) or several cross-collateralized mortgages (a separate mortgage on each property, but which secures the debt against all the properties). For example, the borrower owns five fast-food shops in Los Angeles and wants to utilize all of them as collateral for a $1 million loan. Although each property is only worth $200,000, they are worth a total of $1 million. So the lender agrees to lend $1 million and can secure the loan with either a blanket mortgage (one $1 million mortgage against all of the properties) or five separate $200,000 mortgages, all of which are cross-collateralized so that each property secures the debt of the others. If the lender chooses to use five separate mortgages, he will obtain five title policies, each worth $200,000, but will request that the title company issue an aggregation endorsement, which aggregates all five policies and allows the lender to shift coverage from one policy to another in the event of a loss and foreclosure, effectively increasing the amount of coverage on the affected policy.
In a future blog, we’ll talk about construction mortgages and how owner’s and loan policies are structured to cope with building advances. The examples above, however, should give you a good concept of how to calculate the Amount of Insurance under an Owner’s and a Loan Policy. If you have any doubts about the cost of your title coverage, you should always contact your title agent because prices vary greatly from state to state.
As always, the author’s views are completely his or her own and should not be construed as legal advice. Any statements in this blog should not be taken as statements of law or fact, and the opinions expressed there may not be used as evidence in a court of law or otherwise.
How do I start a title company in Indiana?
You’ve discovered the ideal business opportunity and are now ready to take the next step. There’s more to starting a business than merely filing paperwork with the government. This easy-to-follow tutorial will help you get started with your title firm. These processes will ensure that your new firm is well-planned, legally compliant, and correctly registered.
STEP 1: Plan your business
As an entrepreneur, you must have a well-thought-out strategy. It will assist you in mapping out the details of your company and uncovering some unknowns. The following are a few key points to consider:
How to Get Your Indiana Insurance License
- Pass the exam by going to the testing facility. Bring all essential materials to the test facility on the day of the examination (see below). At the conclusion of the exam, you will be given a score report that will indicate whether you passed or failed.
Who pays property taxes at closing in Indiana?
It may appear difficult to determine who is responsible for property taxes in a real estate transaction, but the key is to understand how and when the state collects payments. Property taxes in Indiana are collected in arrears, which means that the bill covers the prior year’s tax liability.
Property taxes are typically paid to the county treasurer in May and November, so taxes paid in November 2017 cover July-December 2016, while taxes paid in May 2018 cover January-June 2017. The taxes paid this year are for the ownership of a property from the previous year.
When making an offer on a property in Indiana, it’s vital to understand this timeline since the buyer will almost certainly ask the seller to pay the taxes for the time they possessed the property up until the closing date. For example, if a buyer purchases a home in early 2018, the seller may request that the seller pay all of the prior year’s taxes as well as the current year’s taxes up to the closing date. A buyer may be ready to pay for taxes owed on the next installment in some cases, but this is a rare occurrence.
When a seller agrees to pay back taxes, the amount will be deducted from the proceeds. If the property has a mortgage, the mortgage company will pay the seller for any unused funds in the escrow account. Some loan lenders, but not all, will allow the tax proration to be used to offset the amount necessary for the down payment; it is up to the guidelines of each specific lending business.
Property taxes aren’t the only thing that can be prorated in a real estate transaction; homeowner association dues (HOA) are frequently prorated as well. A seller may obtain a credit for unused HOA dues depending on when the costs are due. If monthly dues are $30 and the property closes on the 15th, the seller may only be charged for $15 and may be reimbursed $15 in unused dues. If dues are paid quarterly or annually, the same principle applies.
Samantha Evans is a licensed realtor and broker with Whalen Realty Group, a commercial and residential real estate firm with over 10 years of expertise. She is a MIBOR member. You can reach her at
How much is seller closing cost?
Seller closing costs: Closing charges for sellers can range from 8% to 10% of the home’s sale price. Because the seller normally pays both the listing and buyer’s agent commissions roughly 6% of the total sale it’s more than the buyer’s closing costs. The seller pays an additional 2% to 4% of the sale price in fees and taxes. However, because seller closing expenses are taken from the sale profits at closing, you rarely need to bring cash to the closing table.