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 saving for the down payment for your new home, don’t forget you’ll need to prepare for closing costs too.
Here is what you need to know about closing costs and how much to budget for them.
What Are Closing Costs?
Bankrate explains closing costs like this:
“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.”
Your closing costs are the additional fees and payments that you make at the closing of the sale. According to Freddie Mac, while they can vary by location and situation, closing costs will 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?
Freddie Mac indicates closing costs are typically between two and five percent 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 that you want to purchase at today’s national median price of $384,500. Based on the two and five percent estimate, your closing fees would be roughly between $7,690 and $19,225.
Keep in mind, this depends entirely on the purchase price and the closing costs could vary from this substantially.
Make Sure You’re Prepared To Close
The best way to understand all of the costs involved in purchasing a home is to partner with a team of trusted real estate professionals. Experts can help you understand how much you need to save and what you want to be prepared for. Don’t go it alone—even if you’re not sure when you’ll have enough money saved up. It’s always better to have resources at your disposal to ask any questions that may pop up along the way.
And you may not need as much money as you think. There are many down payment assistance and homebuyer assistance programs out there that are designed to help homebuyers just like you with the cost of purchasing a home. A trusted real estate expert can check your eligibility and let you know what assistance you may be eligible for.
Bottom Line
Planning for the fees and payments you’ll encounter when closing on your home is important. Partnering with a local real estate professional will provide you with the guidance, security and confidence you need to get you from first look to final signature.
—Christy Hinko with One Key MLS Long Island
