Be Prepared for Closing Costs
Buying a home can be one of the most exciting times of your life... or it can be one of the biggest stressors! There is so much to know and understand, it's not just finding a pretty place to call home.
When you purchase a home there are fees involved. Yes, you will need a downpayment for your home but in addition to that, you will have Closing Cost. Closing Costs can vary in price depending upon the type of home your purchasing, the lender you're using, and the closing agent. For instance, if you are buying a condo your closing fees will probably be less than if you are buying a $700,000 home.
Let's get you prepared for your closing cost!
While FHA and VA loans still offer little to no money down, most potential homebuyers will need to save at least 5-20% of the home value. Yes, 5-20% of your home value will be your closing cost. Unfortunately, many first-time homebuyers are dismayed to learn that in addition to the large down payment, they also owe thousands of dollars in closing cost that may not have expected.
That's why as your Real Estate Consultants we work to not only help you find the perfect home but guide you along the way. No one wants to show up at closing owing a couple thousand dollars that they didn't expect.
The national average for closing costs ranges from 2-4% of the purchase price, which adds considerably to the amount of savings needed to buy a home. I always say, aim to the higher side of things.
In addition, while not a closing cost, most lenders also, require a savings reserve equal to at least two months of the mortgage payment.
Needless to say, it adds up.
Let’s break these costs down.
Closing costs include fees charged by the escrow or closing attorney, as well as costs associated with obtaining a home loan, including:
• Escrow fees
• Title search and filing fees
• Appraisal fees
• Home inspection fees
• Wire transfer fees
• Loan costs – These include what are termed “points”; each point is 1% of the purchase price and is used as both commission for the lending officer and as an upfront fee to reduce the loan interest rate.
These are just a few of the extra costs associate with buying and closing on a new home. It’s important to know these costs ahead of time, so potential homebuyers can save the appropriate amount of money needed to buy a home. Nobody wants to be surprised by unexpected costs and end up missing out on the perfect property.
Buying a home can be exciting but can also stressful. Don't worry, we are here to help you EVERY step of the way! If you're not quite ready to buy YET but want to talk about all that's involved, we'd love to set up a time when we can discuss your home buying needs!
Shirley Klein PA Team