The following parties can pay the closing costs:
- The Lender - The lender can build the closing costs into the interest rate and pay the closing costs out of the rate. This is a great option when you are tight on funds to close and the seller is unwilling to pay the closing costs or when you are refinancing and do not want to increase the existing loan amount
- The Seller - It is common practice to ask the seller to pay closing costs for you. The real estate agent that represents you will put in a requested amount into the initial offer to the seller. The seller may or may not agree to pay the closing costs but it is a fairly common practice for the seller to pay the closing costs.
- The Buyer - the buyer can and often does pay the closing costs. In a refinance transaction the costs can be financed into the loan amount. In a purchase transaction, the Buyer pays the closing costs out of pocket. It is common to see the buyer have to pay the closing costs when there are multiple bids on the property and the seller is looking for highest and best. It is also fairly common to see a buyer pay closing costs in a short sale scenario and/or foreclosure scenario.