{Real Estate} Market Monday
Question: What are closing costs and how much are they?
As you know, when buying a home, there are more costs involved than just your down payment, and these are referred to as CLOSING COSTS. While exact amounts vary based on a number of factors, my general rule of thumb is to estimate 1% of the sales price if you're paying the full amount for the property in cash, and 3-4% of the sales price if you are financing with a mortgage.
So what do closing costs cover? Things like:
-Attorney fees
-Lender fees (underwriting, credit report, etc.)
-Title exam fees
-Title insurance
-Recording & transfer tax fees
-Prorated property taxes & HOA dues
-Homeowner's insurance (first year paid up-front)
-Starting balance of your escrow account
-May also include "points" depending on your financing
Keep in mind that- sometimes- you can ask a Seller to contribute toward your closing costs (we refer to these as Seller-paid closing costs, and they are listed on the first page of our Purchase & Sale agreements for an offer). This is a critical piece of your offer, as Sellers consider your offer price minus Seller-paid closing costs when analyzing what your offer means for them!
Your lender should provide you with an estimate of your "Cash to Close" (which is your down payment + closing costs) when you go through the pre-approval process. Don't have a lender? No problem! I have teamed up with some fantastic lenders & mortgage brokers to provide my clients with a great variety of lending program options!
Have questions? Don't know where to begin? The right first step is sending me a message! I can walk you through the process in baby steps to get you to the finish line... buying your home!