Closing Costs: What Exactly Are They and How Much Should You Budget For?
If you are planning on buying a home this year, it is important to plan for any fees or payments you will need to pay at the closing of the transaction, otherwise known as closing costs.
Buying a home can be a very exciting time for you, so it is best practice to know what costs you will be responsible for at the end of the transaction. This way there are no surprises when you go to sign the final documents. According to Bank Rate and I quote, “Closing costs are the fees and expenses you must pay before becoming the legal owner of a house. Closing costs vary depending on the purchase price of the home and how it’s being financed.”
So, what are some closing costs as a buyer you will need to pay? Typically, in a transaction, this can be costs for appraisal, credit reports, lender origination fees, home inspection fees, title and underwriting, and notary fees. Closing costs usually are between 1.5% and 2.5% of the total purchase price of the home but can vary depending on the lender as well as the type of financing. So, for example, if you are purchasing a home for $750,000, your closing costs could be around $15,000. The good news is everything is negotiable, and you may be able to get credit from the seller to offset some of the costs.
That is why it is important to work with an experienced real estate agent who can negotiate the best price and terms for you. In fact, we just helped 2 of our home buyers get a $15,000 credit and the other got a $30,000 credit!! If you would like more information on current market data and the available inventory in the area, reach out to my team and I so we can help you with your search and write the best offer for your next home.
Whether you want to sell your existing home, buy your first home, upsize, downsize, purchase a vacation home, or just talk about options, a real estate professional is your best source for information based on current trends in our area. If you're interested in learning more about the 2023 real estate forecast, don't hesitate to reach out - we're happy to help!