John Wesley BrooksDon’t Get Caught Off Guard by Closing Costs
Buying a home? Planning a budget for the whole transaction is key! Make sure you are aware of those additional fees that could cause some delays in the closing of you new home, yes friends we are talking about the Closing Costs. An old tale said Sellers used to pay for them, but in our current Sellers’ market Buyers are the ones having to save and pay for it. As a homebuyer, it’s important to plan and budget for the expenses you’ll encounter when you purchase a home. While most people understand the need to save for a down payment, a recent survey found 41% of homebuyers were surprised by their closing costs. Here’s some information to help you get started so you’re not caught off guard when it’s time to close on your home.
Let’s Dig In: What Are Closing Costs?
One possible reason some people are surprised by closing costs may be because they don’t know what they are or what they cover. According to U.S. News and World Report:
“Closing costs encompass a variety of expenses above your property’s purchase price. They include things like lender fees, title insurance, government processing fees, upfront tax payments and homeowners insurance.”
The easiest way to see and understand this is this: Your closing costs are a collection of payments and fees made to a variety of individuals and organizations who are involved with your transaction. According to Freddie Mac, while they can vary by location and situation, closing costs typically include:
- Tax service fees
- Survey fees
- Attorney fees
- Underwriting Fees
- Government recording costs
- Appraisal fees
- Credit report fees
- Lender origination fees
- Title services
How Much Will You Need To Budget for Closing Costs?
It’s time to think math friends because understanding what closing costs include is important, but knowing what you’ll need to budget to cover them is critical to achieving your homebuying goals. According to the Freddie Mac article mentioned above, the costs to close are typically between 2% and 5% of the total purchase price of your home. With that in mind, here’s how you can get an idea of what you’ll need to cover your closing costs.
Let’s say you find a home you want to purchase for the median price of $350,300. Based on the 2-5% Freddie Mac estimate, your closing fees could be between roughly $7,000 and $17,500.
Keep in mind, if you’re in the market for a home above or below this price range, your closing costs will be higher or lower. Ask your trusted Real Estate Agent for an estimated closing based on your purchase sales price.
If you are in the North Alabama, specifically Huntsville Metro Area and the surrounding counties, you already know the real estate market has changed for us, 90% of Sellers are not paying closing costs and home buyers taking over those fees are more likely to get an offer accepted!
What’s the Best Way To Make Sure You’re Prepared At Closing Time?
Freddie Mac provides great advice for homebuyers, saying:
“As you start your homebuying journey, take the time to get a sense of all costs involved – from your down payment to closing costs.”
The best way to understand what you’ll need at the closing table is to work with a team of trusted real estate professionals. An agent can help connect you with a lender, and together they can provide you with answers to the questions you might have.
To Conclude:
In today’s real estate market, it’s more important than ever to make sure your budget includes any fees and payments due at closing. Let’s connect so you have the knowledge you need to be confident going into the homebuying process.
Remember, The Brooks Family Of Realtors Has Been Serving The North Alabama Families Since 1972!
