If you’re buying a home, you’re likely going to pay some closing costs. And bad news, those closing costs can pack a wallop. Typical closing costs can range from 2-5% of the home’s purchase price. For a $350,000, you could pay anywhere from $7,000 to $17,500
Closing costs for the buyer usually consist of the following:
-Homeowners insurance -Lender’s fees including loan origination/underwriting fee
-Title search and insurance -Home inspection
-Appraisal fees -Private mortgage insurance (if your down payment is less than 20%)
-Property tax
As you can see, there’s a lot there to pay for, so you don’t want closing costs to sneak up on you.
The most cost effective way to deal with closing costs is to pay them in a lump sum at closing. That’s why budgeting and planning for them is so important!
However, you’ll have the option to roll some closing costs into your monthly mortgage payment. The catch? You’ll pay interest on those costs, just like you would your mortgage. That makes financing the costs more expensive over time.
You can also negotiate with the seller and see if they would take on any closing costs. While it’s not likely in our current market, a motivated seller may be interested.
And just so you know you’re not alone, the seller will also pay some closing costs, usually in the form of commission for the buyer and seller real estate agents who are guiding the transaction. They usually pay 6-7% of the home’s purchase price to the agents.
Now that you know all about closing costs, you can prepare for them. If you have any questions about closing costs or about how to budget for them, just send me a DM.
