Before buying a home, you must plan for all the costs you’ll be responsible for. While you’re busy saving for the down payment, don’t forget you’ll also want to prep for closing costs.
Here’s some helpful information on those costs and how much you should budget for them.
What Are Closing Costs?
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 . . .”
Put, your 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:
- 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?
According to the same Freddie Mac article mentioned above, they’re 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’ budget.
Let’s find a home you want to purchase today at $384,500. Based on the 2-5% Freddie Mac estimate, your closing fees could be roughly $7,690 and $19,225.
But keep in mind, if you’re in for a home above or below this price range, your closing costs will be higher or lower.
Make Sure You’re Prepared To Close
Freddie Mac provides excellent 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.”
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 and what you’ll want you’ll prep for. It also means you have go-to resources for any questions that pop up along the way.
Bottom Line
Planning for the fees and payments you’ll needyou’llver when closing your home is essential. Partnering with a local real estate professional can give you the guidance and confidence you need throughout the process.
