Closing Costs You Need to Budget For

Dated: January 18 2022

Views: 11

๐‹๐ž๐ญ’๐ฌ ๐ญ๐š๐ฅ๐ค ๐š๐›๐จ๐ฎ๐ญ ๐œ๐ฅ๐จ๐ฌ๐ข๐ง๐  ๐œ๐จ๐ฌ๐ญ๐ฌ.
When purchasing a home, everyone knows you need a down payment, but many people don’t realize that in addition to your down payment, more funds are needed to cover your closing costs. Closing costs can include title insurance, tax and utility reimbursements, transfer tax, conveyancing fees, and miscellaneous smaller fees for services like notaries and wire transfers. If you are getting a mortgage, your lender could also require funds to be held in escrow for taxes and insurance, and charge underwriting and application fees.

So how much should you budget for closing costs? Our agents typically tell their buyers to budget anywhere from3-4% ๐˜ฐ๐˜ง ๐˜ต๐˜ฉ๐˜ฆ ๐˜ค๐˜ฐ๐˜ด๐˜ต ๐˜ฐ๐˜ง ๐˜ต๐˜ฉ๐˜ฆ ๐˜ฉ๐˜ฐ๐˜ฎ๐˜ฆ. Here is a quick breakdown of what you may need to factor into your total out of pocket when buying a home:

• ๐™ฐ๐š™๐š™๐š›๐šŠ๐š’๐šœ๐šŠ๐š• ๐™ต๐šŽ๐šŽ: $400-500โฃ
• ๐š„๐š—๐š๐šŽ๐š›๐š ๐š›๐š’๐š๐š’๐š—๐š ๐šŠ๐š—๐š ๐šŠ๐š™๐š™๐š•๐š’๐šŒ๐šŠ๐š๐š’๐š˜๐š— ๐š๐šŽ๐šŽ๐šœ:$1000-$2000
• ๐šƒ๐š’๐š๐š•๐šŽ ๐š’๐š—๐šœ๐šž๐š›๐šŠ๐š—๐šŒ๐šŽ: 0.5-1% of the purchase price
โฃ• ๐šƒ๐š›๐šŠ๐š—๐šœ๐š๐šŽ๐š› ๐šƒ๐šŠ๐šก: 1-2.5% of the loan (this is sometimes split between buyer and seller)โฃ
โฃ• ๐™ผ๐š˜๐š›๐š๐š๐šŠ๐š๐šŽ ๐š’๐š—๐šœ๐šž๐š›๐šŠ๐š—๐šŒ๐šŽ: 0.5-1.5% of the loanโฃ
โฃ• ๐™ฟ๐š›๐šŽ๐š™๐šŠ๐š’๐š๐šœ: typically a full year of your property taxes and homeowners insurance are required upfront)
โฃ• ๐™ฐ๐š—๐šข ๐™ท๐™พ๐™ฐ ๐š๐šŽ๐šŽ๐šœโฃ ๐š˜๐š› ๐šŒ๐šŠ๐š™๐š’๐š๐šŠ๐š• ๐šŒ๐š˜๐š—๐š๐š›๐š’๐š‹๐šž๐š๐š’๐š˜๐š—๐šœ

As home prices are rising 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. Keep in mind that these fees vary depending on location, loan program, and lender.

If you’re thinking about buying and wondering what your fees might be, send us a message – we would be happy to put together an estimate for you!

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