Buying a Home? Have You Budgeted for Closing Costs?

When buying a home, saving for a down payment is a must! However, the down payment is not the only thing you need to include in your budget. Another very important piece of the home buying puzzle, is to plan for the closing costs required when obtaining a mortgage.

What Are Closing Costs?

When closing on a home, many fees are due. Closing cost fees may range from 2% - 5% of the final sales/purchase price of the home and typically include title insurance, loan origination fees, underwriting fees, document preparation fees, and sometimes more.

For example, those who buy a $200,000 home, the closing cost amount could be between $4,000 and $10,000. If you’re purchasing a home above this price range, your costs will be even more. So when you're buying a home, be sure to remember: closing costs are usually between 2% - 5% of the final purchase price.

IMPORTANT:

On closing day, there are many documents! The endless stack of paperwork can be overwhelming so reading every line may be difficult. Work with your real estate agent, lender, and attorney - if you choose, to review the documents ahead of time, before the official day of closing.

The most important thing to read is the closing disclosure, which indicates your loan terms, final closing costs, and any outstanding fees that may have popped up during the process. You will receive this form three days before your set closing date. Once you (the borrower) sign the closing disclosure, there is a waiting period of 3 days, before you can sign the mortgage loan documents. Have questions about the numbers or what any of the mortgage terms mean? Ask your real estate agent - they are an excellent resource for getting you the answers you may need!

In a Nutshell

Communicate with your lender and find a reliable real estate professional to discuss the steps in buying a home. Be sure to include budgeting for all the required expenses you will need to purchase your dream home, so you can avoid any last minute surprises!