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 depending on the home’s purchase price. For a $350,000, you could pay anywhere from $5,000 and up.
Closing costs for the buyer usually consist of the following:
- Homeowners insurance
- Title search and insurance
- Home Appraisal fees
- Property tax
- Lender’s fees including loan origination/underwriting fee
- Home inspection
- Private mortgage insurance (if down payment is less than 20%)
- Real Estate Lawyer fees
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 a percentage of the home’s purchase price to the buyer and seller 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 message and I can help.