Buying a house can be an exciting journey, but it isn’t always as simple as 1,2,3. After the fun of house-hunting and having your offer accepted, there’s still one more major step. Before you grab the keys to your new home, you’ll need to take care of your closing costs.
Here are a few things you need to know about closing costs.
What are closing costs?
Your closing costs include all of the expenses and service fees that are required to finalize your mortgage, and they are paid at the closing of the real estate transaction. Closing is the point when the title of the property is transferred from the previous owners to the new homeowners.
How much are closing costs?
Closing costs typically amount to about two to five percent of the loan principal. A good starting point is to ask your real estate agent approximately how much it’ll cost you. Knowing what range your closing costs will fall into before you make your downpayment can give you time to save some extra money. Often times, a lot of the fees are negotiable. Be sure negotiate when possible, and don’t forget that you can shop around for lenders with better fees at closing.
What do closing costs include?
Closing costs can vary based on the property you purchase and the type of loan you select, but they typically include an appraisal, credit check and title search.
- An appraisal is contracted out to confirm the market value of your home
- Your credit report will help lenders determine your interest rate
- The title search is made in order to ensure no one else has claim to your future property
Don’t let closing costs take you off guard. Prepare for these often overlooked fees.