Debunking the myths and mysteries of closing costs.
Closing costs are the fees paid at the time of closing on your house. You’re so close to being a homeowner! These closing procedures are the last step between you and being an official homeowner.
One critical thing that some buyers forget is the option to have the seller pay closing costs. These costs are definitely on the table for negotiation when you’re choosing a fair price for your home, so make sure your realtor uses this tool to help you negotiate the little things.
If you do not negotiate your seller paying closing costs, it’s important that you have enough liquid assets to pay for them. These costs are typically 2% to 5% of the total purchase price of your home! So, if the home you’re buying costs $150,000, you may spend between $3,000 to $7,500 in closing costs.
What are closing costs? This category encompasses any of the following:
- Credit reporting fees
- Loan origination fees
- Attorney’s fees
- Inspection fees
- Discount points
- Appraisal fees
- Survey fees
- Title insurance
- Title search fees
- Escrow deposits
- Recording fees
- Underwriting fees
Lenders are required by law to give you a good faith estimate on the total dollar amount of the closing costs for your particular situation. You may also negotiate with your lender to obtain a no closing cost mortgage in certain circumstances.
Whatever your situation, closing costs are a pretty minuscule part of the overall cost of home buying. You should be prepared for them, but they will not likely make or break the deal! Consider discussing these fees with both your realtor and lender prior to making an offer on a house in order to understand your strategy and comfort level with these costs.