Introduction
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 to consider the closing costs. In this blog, we will provide you with helpful information on what closing costs are and how much you should budget for them.
What Are Closing Costs?
According to a recent article from Bank Rate, closing costs are the fees and expenses you must pay before becoming the legal owner of a house, condo, or townhome. These costs vary depending on the purchase price of the home and whether it's being financed. In simple terms, closing costs are the additional fees and payments you have to make at closing.
Breakdown of Closing Costs
Closing costs can include a variety of fees and expenses. Here are some common ones:
- 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 Freddy Mac, closing costs typically range between 2% and 5% of the total purchase price of your home. Let's say you find a home you want to purchase at today's median price of $384,500. Based on the 2.5% Freddy Mac estimate, your closing fees could be between roughly $7,690 and $11,922. However, it's important to note that if you're in the market for a home above or below this price range, your closing costs will be higher or lower.
Preparing for Closing Costs
To ensure you're prepared to close on your home, Freddy Mac provides great advice for home buyers. It suggests taking 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.
By working with real estate experts, you'll have access to a group of professionals who can help you understand how much you'll need to save and what you should be prepared for. Additionally, they can serve as go-to resources for any questions that may arise along the way. Partnering with a local real estate professional can provide you with the guidance and confidence you need throughout the home buying process.
Conclusion
Planning for the fees and payments you'll need to cover when closing on your home is crucial. By understanding closing costs and partnering with a local real estate professional, you can navigate the process with confidence and ensure you're financially prepared. Remember, closing costs can vary, so it's important to budget accordingly and seek professional guidance to make informed decisions.