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  • Writer's pictureNathan Zarcaro

Closing Costs in Oregon: Here's What You Should Expect

Updated: Jun 7, 2023

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Prospective homebuyers in Oregon, especially those with outstanding student loan debt, need to be prepared to save up for more than just a down payment. Many first-time homebuyers neglect to consider all of the closing and other miscellaneous fees that go into buying a home, especially for the first time.


In our Oregon first-time homebuyer's guide, we outlined a number of first-time programs available through the Oregon Housing and Community Services organization.



Oregon closing costs


The average closing costs in Oregon are about $3,911, including property taxes, according to CloseCorp. With the majority of homes across the state now selling for around $510,000, as of May 2022 Zillow data, prospective homeowners in Oregon can expect these closing costs to increase somewhat, at least the sum required to pay property taxes.


Generally, across Oregon, you can expect to pay about 1-1.5% of the home's value in traditional closing expenses, plus things like your title search, escrow fees, and other miscellaneous expenses.


Given that these expenses can add up quickly, it is not out of the question to pay 2-4% of the home's price in total closing costs, especially if you decide to pay points on your mortgage.


Of course, the average Oregon closing costs can vary by county and region within the state, depending on your new home's price, location, and other factors. Oregon is one of only thirteen states across the country that do not assess real estate transfer taxes, which can be costly!



How to calculate your closing costs in Oregon


So, you've got a down payment saved up and ready to go. The only thing left to do now is to understand whether you've got enough money to cover your closing and related expenses too.


To help understand exactly how much money you may need, you'll first want to understand the following four major categories of expenses that you'll want to prepare for. These are:


  1. Fees assessed by your lender

  2. Property fees

  3. Establishing your escrow account

  4. Attorney fees (title fees)


1. Lender fees


Anytime you buy a new house, your lender will assess and charge you fees for tasks to get your mortgage all set. State residents, and Americans nationwide, can expect to pay the following types of expenses:


  • Mortgage underwriting fee - Up to $500

  • Document preparation fee - $0-$750

  • Loan origination fees - Up to 1% of the loan amount

  • Private mortgage insurance - Assessed when down payments are less than 20%

  • Credit report fee - $25-$100

  • Title insurance (mandated by many lenders) - around $1,000 for most homes


Your closing costs will also be substantially higher if you decide to pay points on your mortgage to lower the interest rate on your loan. Depending on the interest rate environment and the amount that you pay now, you could get a return on this investment in time.


Not all of these fees will be assessed by every lender, and there could be other miscellaneous ones too, but this is a good start.


A $400,000 home in Oregon will likely leave you with around $2,000 in lender closing fees, plus loan origination fees and PMI if applicable.



2. Property fees


Some of these may be mandated by your lender, but these expenses are still deserving of their own category nonetheless. You'll be responsible for things like a flood certification, home inspection, appraisal (mandated by bank), as well as miscellaneous other closing costs that don't fit in anywhere else, like courier fees.


Your lender can provide you with plenty more information on any of these categories, but expected costs are as followed:


  • Flood certification - not legally required by the state, but likely is mandatory by your lender (less than $20 usually)

  • Home inspection - $300 - $600 for most homes

  • Appraisal - Oregon appraisal fees are higher than the national average and may cost up to $500 or a little more

  • Courier fees - $25-$50


All in, a conservative estimate here would be to allocate about $1,200 for property related fees within your closing costs.



3. Establishing an escrow account


Your lender will want you to establish an escrow account, which holds reserves for expenses like your homeowner's insurance and property taxes. Generally, as a condition for closing, your bank is going to want a prepaid receipt for the first year of home insurance plus at least three months' worth of your real estate taxes.


At the time of closing, you'll also prepay interest for the remainder of the month in which you are closing. This is why closing at the end of the month is so popular, since you'll only have to prepay interest for a much shorter period of time.


The amount of property taxes you'll need to pay at closing depends on:


  1. When property taxes in your Oregon county are assessed

  2. What the prevailing tax rate is in the town/county you are buying into

  3. And more factors


At this time, tax rates across different areas in Oregon vary widely, with the cheapest being Josephine County at 0.58%, and the most expensive county being Morrow at a rate of 1.24%. We'll take a look more closely at property tax rates in a minute.



4. Attorney fees


In Oregon, real estate attorneys are not mandated by state law when you buy a new property, but they are highly recommended. Your attorney can help ensure that things like liens, tax issues, titles, and other potential roadblocks and navigated correctly.


Getting in attorney involved in your real estate transaction will cost a few dollars more. Here are a few common examples of what your attorney may charge for various services before you close:


  1. Title search - $200-$400 depending on your attorney

  2. Title settlement fee - around $500-$700

  3. Recording fees - about $125



Real estate taxes in Oregon


The real estate taxes on your new home are likely to be the largest variable in determining how expensive your closing really is, since you'll likely need to pay at least a couple months worth, depending on when in the year that you buy your new home.


According to SmartAsset, Oregon's tax rates are a shade lower than the national average. Let's take a look at those counties with the five highest and lowest tax rates.


The five OR counties with the highest property taxes are:


  1. Morrow - 1.24%

  2. Linn - 1.22%

  3. Umatilla - 1.18%

  4. Benton - 1.16%

  5. Wasco - 1.16%


On the flip side, the five counties with the lowest rates are:


  1. Jospehine - 0.58%

  2. Curry - 0.66%

  3. Wallowa - 0.69%

  4. Hood River - 0.70%

  5. Tillamook - 0.74%


These differences may not seem like much, but they are. Imagine that you buy a $400,000 home in Morrow County. Given their average tax rate, your annual property tax obligation is likely to be in the range of $4,960. Now, a home with that same valuation, but in Josephine County, will only carry a tax bill of about $2,320.


Given that you'll likely have to pay at least few months of taxes to establish your escrow account, the location of your home within the state could easily alter your closing costs by $1,000 - or even more!


Which brings us to the perfect segway...


Lowering your Oregon closing costs


You've already started to see how these expenses can add up. Luckily, you aren't helpless in this situation without any options to bring down these expenses.



1. Negotiate and shop closing costs


While some services that go into determining your final closing costs likely are not negotiable, some are. Things like attorney's fees, where you can select who you want to work with, can be a great opportunity to save a few dollars on thinks like title searches.


Don't be afraid to be transparent and ask about the price of their services.


Just make sure you aren't using someone unqualified, since any mistakes will likely cost you much more money than you're saving.



2. Choose your lender carefully


If you're not very far into the homebuying process yet (aka you don't have a lender yet), choose one based on their fees, rates, and customer experience reviews online.


Some of the largest and most popular lenders in Oregon at the moment are Rocket Mortgage, New American, Bank of America, and Chase.



3. Buy in an area with cheaper real estate taxes


Since the real estate taxes being held in your escrow account will make up one of the largest components of your closing expenses, purchasing a home in a lower tax area could help keep your closing costs - and future tax bills - down.


 

Becoming a first-time homebuyer is one of the most amazing experiences of your financial life. Fulfilling the American Dream is still very much doable, but it is important to remember that it is more involved than just saving up your down payment.



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About Nathan Zarcaro

Nathan Zarcaro is the founder of The Student Debt Destroyer and is passionate about personal finance related causes.  A 2018 graduate of Providence College's Liberal Arts Honors Program, Nathan studied Finance, and has worked for industry leaders in both finance and healthcare.  In his free time, Nathan enjoys playing golf and traveling with his wife Brigid.

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