What Every Homebuyer Should Know About Closing Costs
Prior to committing to purchasing a home, it's crucial to anticipate all associated expenses. While you focus on saving for the down payment, remember to also prepare for closing costs.
Here's some useful insight into the breakdown of those expenses and how much you should allocate for them.
What do Closing Costs Include?
A recent article from Bankrate explains:
“Closing costs are the fees and expenses you must pay before becoming the legal owner of a house, condo or townhome . . . Closing costs vary depending on the purchase price of the home and how it’s being financed . . .”
In simple terms, closing costs refer to the supplementary fees and payments required during the closing process. As outlined by Freddie Mac, although they may differ based on location and circumstances, closing costs generally encompass:
Government recording costs
Appraisal fees
Credit report fees
Lender origination fees
Title services
Tax service fees
Survey fees
Attorney fees
Underwriting Fees
How Much Are Closing Costs?
Referencing the aforementioned Freddie Mac article, these costs generally fall within the range of 2% to 5% of the total purchase price of your home. Keeping this in mind, let's explore how you can estimate the budget required.
Imagine you've discovered a home you wish to buy at the current median price of $384,500. Considering the 2-5% estimate provided by Freddie Mac, your closing costs could range from approximately $7,690 to $19,225.
However, it's important to note that if you're considering a home either above or below this price range, your closing costs will correspondingly increase or decrease.
Make Sure You’re Prepared To Close
Freddie Mac provides great advice for homebuyers, saying:
“As you start your homebuying journey, take the time to get a sense of all costs involved – from your down payment to closing costs.”
A reliable approach is to collaborate with a team of reputable real estate professionals. This provides you with a network of experts who can guide you in determining your savings goals and preparing for the process. Additionally, having trusted resources ensures you have support for any inquiries that may arise during the journey.
Bottom Line
A reliable approach is to collaborate with a team of reputable real estate professionals. This provides you with a network of experts who can guide you in determining your savings goals and preparing for the process. Additionally, having trusted resources ensures you have support for any inquiries that may arise during the journey. When you’re ready to get the process started, let’s connect.
