Your Guide to Closing Costs in West Virginia

Colorful forests and lush hillsides, riverside trails along the Appalachian Mountains, and a lower cost of living compared to the rest of the country – those are just some of the reasons why homebuyers set their sights on beautiful West Virginia. But before you make the move, you’ve been duly warned: despite its small-town charms and laidback living, West Virginia has some of the highest closing costs in the country.

In a nutshell, closing costs are all the administrative and legal fees you’ll need to pay before you receive the keys to your new home. It takes a village to buy property – you’ll need to pay your lender, appraiser, home inspector, attorney, insurance provider, and the taxman as prime examples. Closing costs can add up to a pretty penny, typically amounting to about 2 to 5 percent of a home’s purchase price, paid alongside the down payment on closing day.

If you’re buying a new home in West Virginia, NewHomeSource has put together the following guide to help you determine how much you should be saving for closing costs, state-specific rules, and how you can potentially lower these costs.

How Much are Closing Costs in West Virginia?

Closing costs in West Virginia run, on average, $9,200 for a home loan of $247,000 according to Listwithclever.com. That price tag makes up 3.72 percent of the home’s price tag.

West Virginia’s closing costs come at a premium with home prices being more affordable. For comparison’s sake, the national average for closing costs is $6,905.

But homebuyers in the Mountain State should expect to spend far more than these estimates. This data excluded two major closing cost expenses – loan origination fees and private mortgage insurance – or PMI, which homebuyers must take out if their down payment is less than 20 percent. Both expenses can add thousands of dollars to closing costs.

Home values have risen, driving up closing costs, too. The median sale price for homes in this state is $244,200.

Keep in mind, though, that closing costs will fluctuate greatly depending on a handful of factors, such as the price and location of the home, your down payment, your credit score, and the type of mortgage.

What Is Typically Included in West Virginia’s Closing Costs?

Each state has its own set of rules when it comes to real estate closings, from hiring an attorney to paying for real estate transfer taxes. With so many moving parts, it’s easier to group your expenses into three fee categories. Here's what to expect in West Virginia:

Mortgage-Related Fees

Unless you have the cold hard cash to buy a home, your first stop in the homebuying process will be to a lender to secure a mortgage. The following are the closing cost fees you’ll incur, including the protocol for hiring an attorney:

Loan Origination Fees

Count on incurring loan origination fees of about 0.5 percent to 1 percent of your total loan. Your lender charges you these fees for all the administrative work involved in setting up your home loan, from the underwrite to producing preapproval letters for your house hunting, to processing your funding at closing.

Credit Report Fees

Just like when you apply for a credit card or personal loan, your lender will need to pull your credit history with the various bureaus to see how you’ve managed previous debts. Expect the lender to pass along this expense to you. If more than one borrower is on the loan application, double this cost.

Private Mortgage Insurance

If you aren’t providing a 20 percent down payment, your lender will expect you to buy private mortgage insurance. This allows borrowers to qualify for a conventional loan even if they put down only five to 19.99 percent. While you’re paying for the insurance, the coverage is for your lender in case of default.

PMI typically ranges from 0.25 to 2.25 percent of your loan. Once you hit the 20 percent mark in home equity, you don’t have to pay for PMI.

Attorney Fees

In West Virginia, it is mandatory to hire a real estate attorney to manage your closing. According to the West Virginia State Bar, your attorney must manage the legal aspects of your real estate closing, especially in conducting a title search and title examination. However, your lawyer can delegate this work to a legal assistant and provide supervision.

You can also count on your lawyer to draft your purchase agreement and contract of sale to double check that your insurance policies are up to snuff.

Legal fees will vary, depending on the complexity of the sale. Some attorneys bill by the hour while others may charge a retainer fee.

Property-Related Fees

Before you trade in your life’s savings to make the single biggest purchase of your life, the property you’re buying will need to clear some hurdles. Common property-related fees include:

Title Search

A key purchase in the homebuying process is the title examination. In this case, a title search involves reviewing historical records like deeds, court records, property indexes, and other record-keeping to ensure the seller’s right to transfer ownership. The last thing you want is to buy a home only to inherit a legal issue over ownership or other problems like unpaid taxes, judgments, or ongoing lawsuits.

You’ll need to pay for this step whether you’re buying a brand-new build or an existing home.

Title Insurance

Once the title search is complete, you’ll need to purchase two title insurance policies – an owner’s policy for you, and a lender’s policy. Title insurance protects both parties in case of “defects in title,” which is when something is missed during the title search or there are claims on the property. This may come in the form of errors in recording legal documents, forgery and fraud, and even undisclosed or missing heirs.

This is a one-time expense, so the insurance applies for as long as you’re the homeowner. It is customary for buyers to pick up the cost for both premiums in West Virginia.

Real Estate Transfer Tax

Transfer taxes are local and state government taxes that are paid as the seller transfers the home to the buyer. They could be listed as a deed tax or stamp tax on your closing costs bill. In the Mountain State, this fee clocks in at a minimum rate of $1.10 for every $500 of property value.

Your municipal recording office may charge a fee for recording the transfer of the deed in public records.

Property Appraisal

Another checkpoint you’ll need to clear before your lender agrees to fund your home loan is the appraisal. Your lender will send a third-party appraiser to your new home to make sure it’s priced at the right value. If you default on your mortgage, your lender needs to know they can sell the property if it goes into foreclosure to make up the outstanding balance.

The appraiser’s job is to evaluate the home’s size and condition and compare how it stacks up to similarly priced homes in the community. While your lender calls the shots on the appraiser, you are billed for this expense.

Property Inspection

For your peace of mind, hire a home inspector who will thoroughly examine the property you’re about to buy. A home inspector’s job is to check on the home’s condition inside and out, from the roof to the foundation to the drainage systems and heating and ventilation. They’ll also check on the health of major appliances.

This step is worth every penny for your peace of mind. Your home inspector will flag any issues you may want to negotiate with the seller before finalizing the deal.

Annual Fees

From managing your mortgage to staying on top of utility bills, and seasonal maintenance, making a house your home takes work! Your closing costs will include a handful of fees that you’ll need to start paying annually:

Property Taxes

In West Virginia, homeowners pay about 0.54 percent of their home’s assessed market value in property taxes, according to the Tax Foundation. Because property taxes are collected on a county level, with each region setting its own tax rate, the precise percentage will vary.

Property taxes are a prepaid expense, meaning they need to be paid at closing and can’t be rolled into your home financing. As part of your closing costs, you’ll need to pay for the first six to 12 months.

Homeowner’s Insurance

Alongside PMI and title insurance, you’ll need to buy a homeowner’s insurance policy that’s in effect at closing before your lender issues your loan. Homeowner’s insurance is mandatory, and for good reason. It’ll cover any physical damage to your home caused by fire, wind, vandalism, or theft.

Check on whether you’ll need additional weather and flood insurance policies to safeguard your home. If you’re keeping pricy heirlooms or artwork in the home, you may need to beef up your home insurance, too.

How Can I Lower my Closing Costs in West Virginia?

Between saving for a down payment and new furniture, you may be looking for ways to lower your closing costs. Here are some key strategies to consider.

Closing Cost Assistance

Take advantage of West Virginia’s homeownership assistance programs as they could put a significant dent in your closing costs.

From statewide homeownership programs organized by the West Virginia Housing Development Fund for first-time and repeat homebuyers to local programs organized by cities, from Charleston to Berkeley, there are plenty of options worth investigating.

Get Your Finances in Shape

Get your credit score as high as you can before shopping for a home loan. With a perfect credit score in tow, you’ll be able to secure a lower interest rate and competitive terms for your loan. This move could save you thousands of dollars over the lifetime of your mortgage.

Apply as much as you can toward your down payment, too. The closer you get to the 20 percent threshold, the less you’ll have to pay in PMI.

Comparison Shop

While some closing cost fees are fixed, such as the appraisal and property taxes, you can shop around for some services, such as your lender, home inspector, and title company.

Take time to compare vendors, ensuring they’re appropriately accredited with glowing reviews from previous customers. With a shortlist in hand, ask for quotes so you can make sure you’re getting the best deal.

Negotiate Lender Fees

If you have a longstanding, established relationship with your lender, you may have some wiggle room with your loan setup fees.

You could ask your lender to omit certain expenses from your bill, such as rate lock fees, loan processing fees or broker rebates. If that doesn’t work, you could also ask to stagger these expenses, so they’re paid in stages instead of all at once at closing.

Seller Concessions

Don’t shy away from negotiating on who pays for which closing cost expenses with the seller, especially if you’re in a buyer’s market.

Try to reassign some of the closing costs. For example, you can submit a full-price offer with a caveat that the seller must pick up all your closing costs. If you’re building a new home, you could ask the builder to cover your closing costs in exchange for paying for a handful of pricy upgrades.

No-Closing-Cost Mortgages

With a “no-closing-cost” mortgage, your lender agrees to pay for part or all of your closing costs, but you must pay a higher interest rate.

Be careful with this option: It could cost you more money overall because of the bump in your interest rate.

Add Closing Costs to Your Home Financing

Aside from the prepaid expenses that must be paid at closing, you could opt to roll your closing costs into your home loan. This could add thousands of dollars to your mortgage. You won’t have to pay for closing costs on closing day, but your monthly mortgage payments will be a bit higher.