Closing costs in Connecticut: what each side pays

“Closing costs” gets used as if it were one number. It is two lists, one for the buyer and one for the seller, and they barely overlap. Most of the confusion comes from people reading the other side’s list.

This guide sorts the lines by who pays them, points out the single line that is specific to Connecticut, and says plainly where a figure is missing rather than guessing at one.

The buyer’s list

A buyer’s closing costs are mostly the cost of getting the loan and insuring the title. The usual categories are:

• Lender charges. Origination and underwriting fees, and the appraisal the lender orders.
• Title work. A title search, and a title insurance policy for the lender. An owner’s policy is optional and is covered in its own guide.
• Recording. Fees to record the deed and mortgage on the land records.
• Prepaids and escrow. The first premium of homeowner’s insurance, and a starting balance for property tax and insurance if the lender escrows them.
• Attorney fee. Connecticut residential closings are conducted with a lawyer, and that fee is a line on the statement.

Two honest caveats. First, prepaids and escrow deposits are not really “costs” in the sense of money that is gone: they fund bills the owner would pay anyway. That is why the total cash needed at the table is a different figure from the closing costs. Second, this guide does not put dollar amounts on these lines. Recording fees in particular do not yet have a primary source we trust, so the page leaves them as [figure pending primary source] rather than estimating.

The seller’s list

A seller’s closing costs come out of the proceeds instead of being paid in addition to the price. The categories are:

• Payoff of the existing mortgage and any liens, which is not a cost so much as a debt settled from the sale.
• Conveyance taxes, discussed below.
• Real estate broker commission, which is negotiated between seller and broker.
• Proration of property taxes and similar charges up to the closing date.
• Attorney fee on the seller’s side.

The Connecticut-specific line: conveyance tax

Connecticut charges two conveyance taxes on a sale, a state tax and a municipal tax, and calculates them separately.

The state tax on a residential dwelling is marginal: 0.75% on the first $800,000, 1.25% from there to $2,500,000, and 2.25% above that. The municipal tax is 0.25% in most towns and 0.50% in sixteen of them, with Stamford stepping from 0.35% to 0.50% at $1,000,000. Together they come to about 1% of the price on a typical sale.

In most residential sales the seller pays them, unless an exemption, a special rule, or a negotiated contract term applies. That makes it the largest line on many sellers’ statements that has nothing to do with the mortgage. On a $450,000 sale in a base-rate town, the total is $4,500 (the state portion is $3,375 and the municipal portion is $1,125). The who pays the conveyance tax guide covers the exceptions, and the conveyance tax calculator will run the figure for a specific price and town.

Where the two lists meet: the Closing Disclosure

For a buyer with a mortgage, federal rules require the lender to provide the Closing Disclosure three business days before the scheduled closing. It itemizes the loan terms, the closing costs, and the cash needed at the table.

That timing exists so a buyer can compare it against the earlier estimate and ask about differences before the day itself. A line that appears on the Closing Disclosure and was not expected is worth a question while there is still time to ask it.

Sellers do not receive a Closing Disclosure. They get a settlement statement, which lists the same kind of items from the seller’s side.

What to take from this

• Ask which list you are reading. A buyer’s estimate and a seller’s estimate are answers to different questions.
• Separate money that is spent (fees, taxes) from money that is deposited or prepaid (escrow, insurance premium, prorations).
• The conveyance tax is the one large, rule-based cost. Most other lines are negotiated or vary by lender and provider.
• Where a page, including this one, gives no dollar figure for a line, that is because no primary source has been checked for it yet.