Buying in Traverse City and wondering how much cash you’ll need beyond your down payment? You’re not alone. Closing costs surprise many buyers because they bundle lender fees, title services, inspections, taxes, and prepaids into one final number. In this guide, you’ll see what those costs cover, typical ranges to plan for, local factors in Grand Traverse County, and smart ways to lower your cash to close. Let’s dive in.
What closing costs cover
Closing costs are one-time fees and required prepaids you pay at or before closing in addition to your down payment. They typically include lender charges, title and recording fees, inspections, government fees, and upfront insurance and tax escrows. You’ll see itemized estimates on your Loan Estimate and final numbers on your Closing Disclosure.
Typical totals in Traverse City
Buyers commonly budget about 2% to 5% of the purchase price for closing costs, not counting the down payment. Your total depends on loan type, lender pricing, title premiums, county recording fees, inspections, property taxes, and any seller or lender credits you negotiate. Waterfront, rural, or unique properties can have added inspection or survey needs, which may increase costs.
Common fees explained
Lender fees and appraisal
- Origination, processing, and underwriting are charged by your lender. These can be a percentage of the loan or a flat fee.
- Discount points are optional and reduce your interest rate. Each point equals 1% of your loan amount.
- Credit report and application fees are usually modest.
- Appraisal is required for most loans. In Northern Michigan, expect a typical range of about $400 to $800, with higher costs for larger or unusual properties.
Title, settlement, and recording
- Title insurance includes a lender’s policy, which is required, and an owner’s policy, which is optional but recommended. Premiums are one-time and based on price and loan amount.
- Title search and settlement fees cover closing coordination and document preparation.
- County recording fees apply to the deed and mortgage. Grand Traverse County sets these fees and recording schedules.
Inspections common in our area
- General home inspection often runs in the $300 to $600 range.
- Pest inspection is sometimes required for VA loans and is common with older homes.
- Radon testing is a frequent request in Michigan. Budget roughly $100 to $300.
- Septic and well inspections are common just outside city limits and in rural areas. Septic is often $300 to $800, well $150 to $400.
- Surveys can be requested to confirm boundaries, especially on larger or waterfront lots.
Prepaids and escrow deposits
- First year of homeowner’s insurance is typically paid at closing or proof of coverage is required.
- Prepaid interest is collected from your funding date until your first mortgage payment.
- Initial escrow deposits for property taxes and insurance are collected to seed your escrow account. The amount varies based on the closing date and local tax schedule.
Government fees and taxes
- Transfer taxes and who pays them can vary by deal structure and local custom. Confirm with your title company how they apply in your transaction.
- Recording fees are charged by the county when the deed and mortgage are recorded.
HOA and miscellaneous items
- HOA transfer fees or initial dues can apply to condos and neighborhoods with associations.
- Small line items like wire, courier, and escrow fees may also appear.
Local factors in Grand Traverse County
Traverse City transactions often include radon, well, and septic evaluations, especially for properties outside the city core and in lake areas. Winter can affect access for inspections and appraisals, which may impact timing. Property tax proration follows the county’s tax calendar, so your share depends on the closing date and the current year’s tax amounts. Title companies rely on the Grand Traverse County Register of Deeds for fee schedules and recording timelines.
How to estimate your cash to close
Use this simple formula:
Cash to Close = Down Payment + Buyer Closing Costs + Prepaids + Initial Escrow Deposits + Other Required Deposits - Earnest Money - Seller or Lender Credits
Follow these steps:
- Ask your lender for a Loan Estimate early. It lists lender fees, appraisal, and estimated closing costs.
- Request a title quote that includes title insurance and county recording fees.
- Get quotes for home, radon, septic, well, and any specialty inspections.
- Confirm the property’s current taxes and estimate proration based on the expected closing date.
- Obtain homeowner’s insurance quotes for the specific property.
- Add any HOA transfer fees or first-month dues.
- Subtract your earnest money and any agreed seller or lender credits.
- Add a small cushion for miscellaneous items, such as wire fees.
Illustrative example
- Purchase price: $350,000
- Down payment: 5% = $17,500
- Estimated closing costs: 3% of price = $10,500
- Prepaids and initial escrow: $2,500
- Earnest money already paid: $3,000
- Seller credit: $1,500
Estimated cash to close:
- Down payment: $17,500
- Closing costs: $10,500
- Prepaids/escrow: $2,500
- Earnest money: ($3,000)
- Seller credit: ($1,500)
- Total estimated cash to close: $26,000
This example is for planning only. Your Loan Estimate and Closing Disclosure will show exact figures.
Ways to lower your cash to close
- Negotiate seller concessions. Depending on loan type, a seller can contribute toward your closing costs within program limits.
- Ask about lender credits. You may accept a slightly higher rate in exchange for a credit toward fees.
- Use down payment assistance. The MSHDA MI Home Loan and down payment assistance programs can reduce upfront cash for eligible buyers.
- Time your closing date wisely. A month-end closing can reduce prepaid interest for that first period.
- Compare insurance quotes. Small savings on your annual premium can meaningfully reduce your initial escrow deposit.
The two documents that matter most
- Loan Estimate: You should receive this within three business days of your mortgage application. It outlines your rate, payment, and estimated closing costs. Learn how to read it when you review your Loan Estimate.
- Closing Disclosure: You must receive this at least three business days before closing. Check it line by line against your Loan Estimate and any updated quotes. See what to verify on your Closing Disclosure.
Quick checklist before you wire funds
- Confirm your cashier’s check or wire amount matches your Closing Disclosure.
- Verify wire instructions directly with the title company by phone.
- Bring a government-issued photo ID to closing.
- Arrange final utilities and homeowner’s insurance effective dates.
- Keep inspection receipts and improvement quotes in case you need them for future negotiations or service calls.
Buying in Northern Michigan is a big step, and understanding closing costs helps you plan with confidence. If you want local guidance on budgeting, inspections, or negotiating credits, connect with a trusted hometown expert. Reach out to Jennifer Gaston to talk through your next steps and start your Traverse City home search with a plan.
FAQs
How much should a Traverse City buyer budget for closing costs?
- Many buyers plan for about 2% to 5% of the purchase price for closing costs, not including the down payment.
Are septic and well inspections common around Traverse City?
- Yes, they are common for rural and lake-area properties near Traverse City and can add a few hundred dollars to total costs.
What programs can help with closing costs in Michigan?
- Eligible buyers can explore the MSHDA MI Home Loan and down payment assistance programs, which may reduce upfront cash.
Who pays transfer taxes in Michigan home sales?
- Responsibility can vary by deal structure and local practice; your title company will clarify who pays and how much in your transaction.
When will I know my exact cash to close?
- You’ll get a Loan Estimate within three business days of applying and a final Closing Disclosure at least three business days before closing that shows your exact amount.
