What buyers pay at closing in Delaware

Delaware charges a realty transfer tax when a home changes hands. In most of the state the total is 4%: 2.5% to the state and 1.5% to the county or town. State law apportions the tax equally between seller and buyer, and your Agreement of Sale states how it is handled in your purchase. On an even split of a 4% tax, the buyer’s share comes to about 2% of the price.

Buyers who meet Delaware’s definition of a first-time home buyer, and who will live in the home, can have their share of the state tax reduced by 0.5% on up to $400,000 of the value. That is a reduction of up to $2,000. See the Delaware transfer tax guide for who qualifies.

If you are borrowing, your lender’s charges can include:

• an origination or application charge, plus any points you choose to pay for a lower rate,
• the appraisal,
• a credit report,
• the lender’s title insurance policy, which protects the lender.

Every loan is different. Your lender lists these costs on the Loan Estimate you get after you apply, and the final figures on the Closing Disclosure.

In Delaware, a Delaware-licensed attorney conducts the settlement. The attorney’s office examines the title, prepares or reviews the papers that transfer it, and supervises the money at settlement. Costs on this side usually include:

• the attorney’s settlement fee,
• the title search and examination,
• an owner’s title insurance policy, which protects you against covered title problems found later,
• fees to record the deed and the mortgage.

Ask the settlement office for a quote early, so the number is in your budget. See how a Delaware settlement works.

Some costs are paid ahead at settlement:

• Homeowners insurance, often the first year’s premium.
• Property tax adjustments. Taxes are usually prorated, so buyer and seller each pay for the time they own the home.
• Escrow deposits. Many lenders collect a few months of taxes and insurance up front to start your escrow account.
• Prepaid interest on the loan, from settlement day to the end of that month.
• Community fees. Some HOAs and condo associations charge fees at a sale. The community documents spell them out.

• Seller help. Your offer can ask the seller to pay part of your closing costs. Loan programs limit how much.
• Delaware State Housing Authority (DSHA) help. DSHA offers zero-interest second mortgages that can help eligible buyers with the down payment and closing costs, through participating lenders. There is no monthly payment; the loan comes due when you sell, refinance or transfer the home, or stop living in it as your primary residence. Amounts and limits change, so ask a participating lender what is available now.
• Lender credits. Some lenders offer a credit toward costs in exchange for a higher rate. Ask your lender to show you both ways.

Your lender must give you the Closing Disclosure at least three business days before you close. It lists your final loan terms and every cost. Compare it line by line with your Loan Estimate and ask about anything that changed. Before you wire money, call the settlement office at a number you already trust to confirm the instructions. Talk to your settlement attorney, lender or tax advisor about your own numbers.