Closing Costs Explained for Birmingham Homebuyers

What will you actually need to bring to the closing table in Birmingham? If you are like most buyers, the answer feels fuzzy until the last week. You should not have to guess. In this guide, you will learn what closing costs include, how much to budget, Oakland County specifics, and a simple way to estimate your cash to close. Let’s dive in.

What closing costs include

Closing costs are the fees, taxes, and prepaids you pay to complete a home purchase, separate from the price of the home. They cover lender charges, third‑party services like title and appraisal, government fees, and prorations for items like property taxes or HOA dues.

As a buyer, a good planning range is 2% to 5% of the purchase price. Cash purchases or simple files fall near the low end. Loans with points, mortgage insurance, or larger prepaids land higher. For context, sellers often spend about 6% to 10% of the sale price, with agent commissions being the largest share.

Typical buyer costs in Birmingham

Lender fees and points

Your lender may charge application, processing, and underwriting fees. Origination can run about 0.5% to 1.5% of the loan amount. You can also choose discount points to lower your rate, which are optional and priced as a percentage of the loan.

Appraisal and credit report

Most loans require an appraisal. Plan roughly $400 to $800. Credit report fees are modest by comparison.

Inspections

Inspections are usually your responsibility. General home inspections often range from $300 to $700. You may add pest or radon inspections if needed.

Title, escrow, and recording

Expect fees for title search and title insurance. If you finance, your lender requires a lender’s title policy. An owner’s title policy protects you and may be paid by the seller or buyer based on local custom. Closing or escrow fees cover the settlement services. Recording fees for the deed and mortgage are set by Oakland County and add a small fixed amount.

Typical combined title and closing fees often total $300 to $1,000, plus the title insurance premium that scales with price. Recording fees usually run tens to a few hundred dollars.

Prepaids and escrow deposits

You will prepay your first year of homeowner’s insurance at closing. You also fund an escrow account for future taxes and insurance, often equal to 2 to 6 months of the tax and insurance portions. Prepaid mortgage interest covers the days from closing to your first payment.

HOA and miscellaneous

If the home has an association, there may be transfer or estoppel fees and prorated dues. Other small items can include survey (if required), wire, or courier fees.

How to estimate your cash to close

Use this simple method to build a working estimate for an Oakland County purchase:

1. Start with the purchase price.
2. Subtract any seller credits or contributions you negotiated.
3. Add buyer closing costs. Use 2% to 5% of the price as a planning range.
4. Add prepaids and initial escrow deposits. Estimate 1 to 3 months of taxes and insurance plus prepaid mortgage interest.
5. Subtract your earnest money deposit already paid.
6. The result is your estimated cash to close.

Example for illustration: If you buy at $500,000, a 3% estimate for buyer fees is $15,000. Prepaids of about $3,000 bring subtotal costs to $18,000. If you already paid $5,000 in earnest money, your estimated cash to close is about $13,000.

Quick worksheet you can copy into your notes:

• Purchase price: ________
• Seller credits: ________
• Estimated buyer costs (2%–5%): ________
• Estimated prepaids/escrows: ________
• Earnest money paid: ________
• Estimated cash to close = (Price − credits + costs + prepaids) − earnest money

Getting accurate numbers

• Review your Loan Estimate. Lenders must provide this within 3 business days of your application. It outlines your loan terms and estimated closing costs. See the Consumer Financial Protection Bureau’s overview in the CFPB guidance on Loan Estimates and Closing Disclosures.
• Review your Closing Disclosure. You must receive this at least 3 business days before closing. It shows the final cash to close and itemized fees. The CFPB page above explains what to check.
• Ask your title company or escrow officer for a fee estimate. They can quote title premiums, closing fees, and recording costs.
• Verify tax prorations. Oakland County prorates property taxes based on the closing date and each municipality’s tax cycle. For dates and general guidance, visit the Oakland County Treasurer. If you need recording details, check the Oakland County Register of Deeds.
• For transfer tax rules, see the Michigan Department of Treasury.

Birmingham and Oakland County specifics

Recording and transfer taxes

Recording fees are set by Oakland County and vary by document type. They are a modest part of closing costs. Michigan assesses real estate transfer taxes. Exact rates and who pays can vary by transaction, so confirm using the Michigan Department of Treasury and your title company.

Property tax proration

At closing, taxes are prorated between you and the seller based on the closing date and the local tax calendar. Some municipalities bill on different cycles, which affects how much you prepay and how much the seller is credited. Check the Oakland County Treasurer for timing and to understand summer/winter bill structures in your city.

Title insurance custom

In many U.S. markets, sellers purchase the owner’s title policy, but customs can vary by county and even by deal. Ask your agent or title company what is typical in Birmingham. You can also consult Michigan REALTORS for general guidance on customary allocations.

What sellers typically pay

Sellers usually pay the real estate commission, which commonly totals about 5% to 6% of the sale price. Other seller costs can include an owner’s title policy if customary, recording or payoff fees, agreed repairs, or a buyer credit. In total, sellers often plan for about 6% to 10% of the sale price. Knowing this can help you structure requests for concessions when appropriate.

Timeline and buyer checklist

Key timing

• Loan Estimate: delivered within 3 business days of your mortgage application.
• Appraisal: typically ordered early in underwriting.
• Closing Disclosure: delivered at least 3 business days before closing.
• Final walk‑through: usually the day before or the day of closing.

Practical checklist

• Get your Loan Estimate and compare lender fees in writing.
• Schedule inspections quickly so you have time to negotiate repairs or credits.
• Ask the title company for a written estimate of title, closing, and recording fees.
• Confirm tax proration method and any special assessments with your agent.
• If the home has an HOA, request the estoppel or transfer details early.
• Verify wire instructions with the title company by phone on the day you send funds to avoid wire fraud.

Smart ways to reduce closing costs

• Shop lenders for lower origination fees and competitive rates.
• Ask for seller concessions to cover certain costs.
• Compare title and settlement fees among reputable local providers.
• Evaluate whether paying discount points makes sense for your time horizon.
• Budget using the high end of the range so you are not short at closing.

Ready to buy in Birmingham?

You deserve clear numbers and a calm, on‑time closing. If you want local guidance on costs, proration, and negotiation strategy tailored to Birmingham and greater Oakland County, connect with Michael Stroud & Nikki Snyder. Schedule a consultation at Michael Stroud & Nikki Snyder.

FAQs

What are typical buyer closing costs in Birmingham, MI?

• Most buyers budget about 2% to 5% of the purchase price, including lender fees, third‑party services, government fees, and prepaids.

How do I know my exact cash to close?

• Your lender’s Loan Estimate and the final Closing Disclosure list itemized costs and the exact amount due at closing; review both carefully.

Who usually pays for the owner’s title insurance in Oakland County?

• It is a matter of local custom and negotiation; ask your agent or title company what is typical for Birmingham before you write your offer.

How are Oakland County property taxes handled at closing?

• Taxes are prorated between buyer and seller based on the closing date and the municipality’s tax cycle; confirm timing with the Oakland County Treasurer.

What government fees should I expect in Michigan?

• Expect county recording fees and state transfer taxes; check the Michigan Department of Treasury for current rules and confirm amounts with your title company.

Can I lower my closing costs without hurting my deal?

• Yes. Shop lenders, compare title fees, and negotiate seller concessions where appropriate; also decide if discount points fit your plan.

What is the difference between earnest money and an escrow account?

• Earnest money is your good‑faith deposit applied at closing; an escrow account holds funds for future tax and insurance payments funded at closing.

Helpful resources: CFPB guidance on Loan Estimates and Closing Disclosures; Oakland County Register of Deeds; Oakland County Treasurer; Michigan Department of Treasury; Michigan REALTORS.