Before making the decision to buy a home, it’s important to plan for all the costs you’ll be responsible for. While you’re busy saving for the down payment, don’t forget you’ll want to prep for closing costs too.
What are closing costs? Simply put, closing costs are the additional fees and payments you have to make at closing. According to Freddie Mac, while they can vary by location and situation, closing costs typically include:
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Government recording costs
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Appraisal fees
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Credit report fees
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Lender origination fees
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Title services
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Tax service fees
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Survey fees
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Attorney fees
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Underwriting Fees
How much are closing costs? According to the Freddie Mac article, they’re typically between 2% and 5% of the total purchase price of your home. With that in mind, here’s how you can get an idea of what you’ll need to budget.
Let’s say you find a home you want to purchase at a price of $384,500. Based on the 2-5% estimate, your closing fee would be between roughly $7,690 and $19,225. Keep in mind that if you’re in the market for a home above or below this price range, your closing costs will be higher or lower.
Make sure you’re prepared to close. The best way to do that is by partnering with a team of trusted real estate professionals. That gives you a group of experts to help you understand how much you’ll need to save and what you’ll want to be prepared for. It also means you have go-to resources for any questions that pop up along the way.
The bottom line. Planning for the fees and payments you'll need to cover when you're closing on your home is important. Partnering with a local real estate professional can give you the guidance and confidence you need throughout the process.
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