So you found the house of your dreams? You saved up for the down payment, got approved for a mortgage, figured out your monthly payments and now you’re ready to close. There’s just one thing standing between you and your future home though – your closing costs.
Closing costs are those extra costs in addition to the sales price of your home that are required before you can officially sign your name on the dotted line. You should expect to pay around 2-5% of the purchase price of your home in closing costs. This means that on a $100,000 home, you should expect to bring $2,000 – $5,000 in cash to the table.
A common misconception about closing costs is that they all go to the lender. However, closing costs typically break down into three groups: third party fees, state and local government fees and lender fees. So what are all of these charges that make up your total closing costs?
Well, they often include items such as:
- Running your credit report
- Closing fee to the title company or attorney conducting the closing
- A loan origination fee to process the loan paperwork for you
- Charges for any required or requested inspections
- Appraisal fee
- Tax prorations
- Setting up Escrow
- Survey fee to cover the cost of verifying the property lines around your home
- Title insurance to protect your lender from title that isn’t clean
- Title search fees for a background check on the title to make sure there aren’t any unpaid mortgages or tax liens on the property
- Underwriting fee to cover the cost of evaluating a mortgage application
- Courier fee to cover the cost of transporting documents to complete the loan transaction
Looking for more information? One of the best investments you can make is to have a buyer’s agent on your side. This person will know your local area and have the expertise to help you through the entire home-buying process. Ask them to explain the local sales contract to you and give you an estimate of your closing cost. Remember, the homeowner’s realtor is working for the seller’s best interests, not yours. Working with a buyer’s agent who has your best interest in mind is invaluable.
To get matched with a quality real estate professional in your area, visit InHouseRealty.com. In-House Realty has successfully paired over 80,000 home buyers and sellers with amazing agents.
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