Before you buy a home, it’s important to plan ahead. While most buyers consider how much they need to save for a down payment, many are surprised by the closing costs they have to pay. To ensure you aren’t caught off guard when it’s time to close on your home, you need to understand what closing costs are and how much you should budget for.
- What Are Closing Costs?
According to Bankrate, Closing costs are the fees and expenses you must pay before becoming the legal owner of a house, condo or townhome. Closing costs vary depending on the purchase price of the home and how it’s being financed
- Who Pays Closing Costs?
Both buyers and sellers pay closing costs. However, the buyer usually pays most of them. You can negotiate with a seller to help cover closing costs, which are called seller concessions. Seller concessions can be extremely helpful if you think you’ll have trouble coming up with the money you need to close. There are limits on the amount that sellers can offer toward closing costs. Sellers can only contribute up to a certain percentage of your mortgage value, which varies by loan type, occupancy and down payment.
- How Much Will You Need To Budget for Closing Costs?
The costs to close are typically between 2% and 5% of the total purchase price of your home. Let’s say you find a home you want to purchase for the median price of $366,900. Based on the 2-5% Freddie Mac estimate, your closing fees could be between roughly $7,500 and $18,500. 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.
- What’s the Best Way To Make Sure You’re Prepared at Closing Time?
Work with the Stephanie Young Group to understand exactly how much you’ll need to budget for closing costs. We are here to guide you and we can help connect you with a lender, and together your expert team can answer any questions you might have.
It’s important to plan for the fees and payments you’ll be responsible for at closing. If you’re thinking about buying a home, be sure to plan for closing costs. Let’s connect so I can help you feel confident throughout the process. Give us a call at 714.251.3612 or email at [email protected].
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