Ever heard a friend say their closing day cost more than they expected? It usually comes down to one thing: closing costs. If you are buying in Tullahoma or anywhere in Coffee County, understanding these fees will help you plan your cash to close and avoid surprises. In this guide, you will learn what buyers typically pay, how to estimate your total out-of-pocket, and which local details matter most. Let’s dive in.
Why closing costs matter
Your down payment is only part of the cash you need at closing. Closing costs are the additional fees to get your loan, verify the property, insure the title, and prepay items like taxes and insurance. A common rule of thumb is about 2 to 5 percent of the purchase price for buyer closing costs before prepaids, but your exact number depends on your loan type, price point, and local fees. The best way to pin it down is to ask for a formal Loan Estimate from your lender.
What buyers typically pay
Lender fees
- Origination or processing fee. Often 0.5 to 1.5 percent of the loan amount. This covers lender processing, underwriting, and admin.
- Discount points. Optional. One point equals 1 percent of the loan amount and may lower your rate.
- Application and underwriting line items. These vary by lender. A credit report is often 25 to 50 dollars.
- Rate lock or lock extension fees. May apply if you lock your rate or extend past the lock period.
Appraisal and inspections
- Appraisal. Commonly 350 to 800 dollars depending on the home and location.
- Home inspection. Often 300 to 600 dollars for a general inspection. Specialty inspections, like termite, septic, or radon, are extra if you order them.
- Survey. Sometimes required. Budget 300 to 600 dollars or more depending on property complexity.
Title, settlement, and recording
- Title search and title insurance. Your lender will require a lender’s policy. An owner’s policy is optional but recommended to protect your equity. Premiums vary by policy and provider.
- Closing or settlement fee. Often 300 to 800 dollars depending on the title or closing company.
- Recording fees. Paid to Coffee County to record your deed and mortgage. Amounts are set by the county and are usually modest per document or per page.
- Transfer or conveyance tax. Check current Tennessee and Coffee County practices for any applicable taxes or stamps on the deed.
Prepaids and escrow deposits
- Prepaid interest. Covers interest from your closing date to the day before your first mortgage payment.
- First year homeowner’s insurance. Many lenders require you to pay the first 12 months at closing.
- Initial escrow deposit. Lenders often collect a few months of property taxes and insurance to seed your escrow account.
- HOA setup or dues. If the property is in an association, expect any transfer fee and prorated dues.
Optional or one-time items
- Owner’s title policy. One-time premium to protect your ownership.
- Additional inspections or reports. Ordered as needed for the property.
Credits that reduce your costs
- Earnest money. Credited toward your cash to close.
- Seller concessions. A seller can pay some of your costs if negotiated in the contract and within loan program limits.
- Lender credits. Choosing a slightly higher interest rate can generate a credit to offset costs.
How to estimate your cash to close
Use a simple worksheet to total your down payment, estimated closing costs, and prepaids, then subtract credits. Here is a step-by-step approach you can mirror in a spreadsheet.
Start with basic inputs
- Purchase price
- Down payment percent or dollar amount
- Earnest money already paid
- Loan program and estimated interest rate
- Estimated annual property taxes and homeowner’s insurance
- Any HOA monthly dues
- Planned seller or lender credits
Add estimated closing cost line items
- Lender fee or origination percent
- Appraisal cost
- Credit report
- Home inspection
- Title insurance and settlement fee
- Recording fees
- Survey and other third-party reports if applicable
Subtotal these items as Estimated Closing Costs.
Add prepaids and escrow deposits
- Prepaid interest formula: Loan amount × annual rate ÷ 365 × days from closing to month-end
- First year homeowner’s insurance premium
- Initial escrow deposit. For example, 2 months of taxes plus 2 months of insurance. Formula example: (annual taxes ÷ 12 × months collected) + (annual insurance ÷ 12 × months collected)
- HOA prepaids or transfer fees
Subtotal these items as Prepaids and Escrow.
Subtract your credits
- Earnest money deposit
- Any seller credits
- Any lender credits
Final cash to close formula
Down payment + Estimated Closing Costs + Prepaids and Escrow − Earnest Money − Seller Credits − Lender Credits
Worked example
Assume a 300,000 dollar purchase in Tullahoma with 5 percent down.
- Down payment: 15,000 dollars
- Estimated closing costs at 3 percent: 9,000 dollars
- Prepaids and escrow example:
- First year insurance: 1,200 dollars
- Prepaid interest: If loan amount is 285,000 dollars at 6.5 percent, and you close with 15 days left in the month: 285,000 × 0.065 ÷ 365 × 15 ≈ 760 dollars
- Initial escrow deposit: If annual taxes are 2,400 dollars and insurance is 1,200 dollars, and your lender collects 2 months of each: 400 dollars + 200 dollars = 600 dollars
- Prepaids and escrow subtotal: about 2,560 dollars
- Credits: 3,000 dollar earnest money and a 2,000 dollar seller credit
Cash to close = 15,000 + 9,000 + 2,560 − 3,000 − 2,000 = 21,560 dollars
This is only an example. Your lender’s Loan Estimate and your title company’s quote will give you exact figures.
Tullahoma and Coffee County specifics
Property taxes and assessment
Tennessee generally assesses residential property at 25 percent of fair market value. To estimate taxes, multiply the appraised value by 25 percent to get the assessed value, then apply the Coffee County and, if inside city limits, City of Tullahoma millage rates. Formula: (Assessed value ÷ 100) × combined mill rate = annual tax. For current rates and property-specific questions, contact the Coffee County Assessor of Property and the Coffee County Trustee. If the home is inside Tullahoma city limits, check with the city tax office for city rates.
Recording and transfer charges
Recording fees and any deed taxes are set by the Coffee County Register of Deeds. Ask for the current fee schedule before you estimate recording costs, and confirm whether any transfer tax applies to your transaction type.
Title and settlement practices
Title insurance premiums and settlement fees vary by provider. A local title company can quote the lender’s policy, optional owner’s policy, closing fee, and any courier or overnight fees.
Local loan programs
Different lenders have different fee structures, appraisal vendors, and escrow policies. USDA rural development loans are common in many rural Tennessee areas and may offer no down payment with a guarantee fee that can be financed. Compare Loan Estimates from at least two lenders to see your best option.
Insurance and flood zones
Homeowner’s insurance premiums vary by home and carrier. Flood insurance may be required if the property lies in a FEMA flood zone. Your lender and insurance agent can confirm if a flood policy is needed and estimate the premium.
Loan program differences
- Conventional. Closing costs often land in the 2 to 5 percent range before prepaids. Seller credits are allowed within program limits.
- FHA. Requires an upfront mortgage insurance premium of 1.75 percent that can be financed, plus annual MIP. Seller concessions are capped.
- VA. Has a funding fee that depends on service history and down payment. The fee can often be financed. Concessions have caps.
- USDA. Uses a guarantee fee that may be financed. Often offers zero down payment subject to eligibility rules.
Always check your Loan Estimate to see the exact fees for your program.
Tips to avoid surprises
- Request a Loan Estimate within three business days of applying with each lender you consider.
- Compare lender fees and rates side by side, not just the monthly payment.
- Ask a title company for a quote on title insurance, closing fees, and recording costs.
- Choose a closing date with prepaid interest in mind. Closing later in the month generally reduces the number of prepaid interest days.
- Negotiate seller credits where allowed by your loan program.
- Keep your earnest money receipt and follow your closing company’s wire instructions carefully.
What to bring on closing day
- Government-issued photo ID
- Certified funds or wire confirmation for your remaining cash to close
- Any documents your lender or title company requested in advance
If you want a simple, fill-in-the-blank worksheet that mirrors the steps above, reach out and ask for one. You can plug in your Loan Estimate numbers and get a clear total fast.
Ready for local, one-on-one guidance on a Tullahoma purchase? Connect with Ben Craig to review your numbers and move forward with confidence.
FAQs
How much are buyer closing costs in Tullahoma?
- A common guideline is 2 to 5 percent of the purchase price before prepaids, but your exact amount depends on your loan type, price, local taxes, and any seller or lender credits.
Are closing costs negotiable for Coffee County buyers?
- Yes. You can request seller concessions, compare lender fees, and use lender credits in exchange for a slightly higher rate. Program rules set limits on seller concessions.
What are the Loan Estimate and Closing Disclosure?
- By federal rule, lenders must send a Loan Estimate within three business days of application and a Closing Disclosure at least three business days before closing. These list your costs.
Who pays transfer taxes in Tennessee closings?
- Transfer tax practices vary by location. Confirm current deed tax and who pays with the Coffee County Register of Deeds and your title company.
Can I roll my closing costs into the mortgage?
- Some costs can be financed or covered by seller or lender credits, depending on program and product. Financing increases your loan amount and monthly payment.
Do I need an owner’s title policy in Tullahoma?
- It is optional but recommended. Your lender will require a lender’s policy. An owner’s policy is a one-time premium that protects your equity.
How do I prevent last-minute changes to my cash to close?
- Review your Loan Estimate early, confirm title and recording fees with local providers, and ask your lender for exact escrow requirements and tax estimates ahead of closing.
