When buying a home, saving for a down payment is the main cost that comes to mind, but budgeting for the closing costs required to get a mortgage is just as important. Having a budget and making sure you plan ahead for certain homebuying expenses is critical in the home buying process.
What are closing costs
Closing costs are fees associated with your home purchase that are paid at the closing of a real estate transaction. Closing is the point in time when the title of the property is transferred from the seller to the buyer.
When you close on a home, several fees are due. They can include title insurance, origination fees, underwriting fees, document preparation fees, and more. Closing costs are typically between 2% and 5% of your purchase price.
For example, for someone buying a $300,000 home, they could have between $6,000 and $15,000 in closing fees.
Work closely with your real estate agent, lender, and attorney
There will be plenty of paperwork in front of you on closing day, and not enough time to read them all. Work closely with your real estate agent, lender, and attorney, if you have one, to get all the documents you need ahead of time.
Above all, the most important thing to read is the closing disclosure, which shows your loan terms, final closing costs, and any outstanding fees.
If you have any questions about the numbers or what any of the mortgage terms mean, this is the time to ask. Our real estate agents are a great resource for getting you all the answers you need!
As more and more buyers are finding themselves competing in bidding wars, it’s more important than ever to make sure your plan includes budgeting for closing costs. Get in touch with us today to ensure you’re prepared to buy your dream home!