Have you ever decided to purchase something and then been blindsided by additional costs and fees at the end? Surprise extra expenses at the eleventh hour can really blow your budget and possibly derail your plans.
The last thing you want is to be surprised by unexpected fees – especially on closing day!
Walk into your closing prepared and knowing exactly what to expect, so that you can sign with confidence and take those smiling photos with the keys to your new home.
Here’s how to plan ahead for closing fees:
What’s the deal with closing costs?
Closing costs typically run about 2% to 5% of the purchase price and are paid to lenders, attorneys and other third parties, such as inspectors, surveyors, and other service providers utilized during the home buying process. Some service providers invoice at the time of service, while others are paid at the closing table, so keep track of who was paid and who wasn’t, and look for appropriate invoices to be included on your closing disclosure. Buyers often have more closing costs than sellers because most fees are related to the new mortgage loan.
Common closing costs for buyers:
- Loan processing fees
- Home appraisal and inspection fees
- Property taxes
Common closing costs for sellers:
- Mortgage payoff fees
- Title transfer fees
- Attorney fees for handling the closing
How can you lower the costs?
After applying for a mortgage, you’ll receive a Loan Estimate from the lender. It summarizes the loan terms, such as the loan amount, interest rate and all closing costs. Comparing Loan Estimates from different lenders is important. You might choose to get estimates from your bank, credit union, and/or private lenders. Talk to different lenders about various programs they offer that you may qualify for.
Page 2 of the Loan Estimate also details the services you can shop around for, such as surveys, appraisals and title searches.
Are closing costs ever negotiable?
Yes. A seller or buyer sometimes agrees to pay part or all of the other party’s closing costs. This is something we can negotiate into the purchase agreement.
As for paying the closing costs? Some lenders will allow you to roll the cost into your mortgage. However, you’ll pay interest on it for the life of the loan. Paying cash upfront is a more cost effective option if you have the funds available.
Do you have more questions about closing on a home? Or are you ready to get your home search started? Give me a call! 704-792-8768
