WHAT ARE THE closing costs…

 

Buying a home involves several upfront costs.  Below are some of the costs you should expect and plan for when buying a home:

  • Option Fee (variable: typically ranges from $500 - $3000 and due within 3 days after offer is accepted)

  • Earnest Money (variable: 1%- 3% of the purchase cost of the home and also due 3 days after offer is accepted)

  • Home Inspection ($400 - $600 and done ASAP during option period)

  • Misc. Contractor Visit Costs 

    • Electrical

    • Environmental

    • Foundation

    • HVAC

    • Plumbing

    • Pest Control

      *$100-$200 per visit. And many times they will do a free quote or apply this fee towards the cost of the repairs. These visits will be determined on a case by case basis as dictated by the inspection

Down Payment

The biggest mortgage cost you’ll pay usually is your down payment. While certain loans don’t require a down payment, most loan types require at least 3.5% of the agreed-upon purchase price (although some go as low as 3%).

Appraisals and Surveys of Property

Included in lender-related fees can be services such as an appraisal or property survey. While the information from these services may be available to you, the main reason to hire individuals is to do these jobs to help the lender get independent verification that everyone understands the value of the property and its boundaries. Sometimes homes have existing surveys and you do not need to get a new one, but it’s never a bad idea!

Plan on these services, which can cost $300-$700, as part of the cost of borrowing money, since lenders want full verification of what the collateral for the loan—your property—is worth, and that there isn’t a disputed claim on it.

Title-Related Fees

A separate collection of fees that typically are charged at closing include title services, which can add up to $2,000 on average, as it covers a number of items:

  • Title search: This determines whether anyone else has financial claim on the property, such as a lien or an easement. This search, which can cost $75-$200, helps verify that the property can be sold.

  • Title settlement: This fee, which varies, covers the administrative costs associated with the closing, such as escrow, survey, and notary services.

  • Title insurance: Most lenders require you purchase this policy to protect the amount they lend. This one-time fee is typically 0.5%-1% of the sale price.3 You also have the option to purchase an owner’s title insurance policy to protect your financial investment in the home; however, this is not required. 

  • Recording fee: In most states, reporting that a property has changed hands results in a recording fee of around $125 on average.3 This covers the costs associated with filing deeds and other documentation with your county’s public records.

Lenders may have recommendations for where to purchase title services, but you can shop around for quotes, potentially generating savings.

Ongoing Costs, Fees, and Taxes

While closing will often include the first months or even years of certain ongoing costs, you will likely be responsible for additional ongoing bills once you are a homeowner. Local property taxes will be your responsibility, as will premiums on a homeowners insurance policy.

If your property is part of a homeowners association, you’ll need to pay dues, which can range from only a few dollars to hundreds of dollars per month, depending on what amenities are part of the HOA.

Lenders can often adjust your monthly payment to include estimated tax and insurance costs, with a slight adjustment at some point down the road if your tax or insurance costs are assessed higher or lower than expected. Doing this yields fewer bills for you to handle, and can be worth it if you want to simplify your bill-paying experience.

*AND REMEMBER, YOU PAY NOTHING TO THE BUYER’S AGENT. THE SELLER PAYS ALL THE REALTOR FEES FOR YOU. WE ARE SIMPLY HERE TO REPRESENT YOU AND GUIDE YOU THROUGH THIS TRANSACTION!