Planning ahead is crucial when purchasing a home, as it is not only important to save for the down payment, but also for the closing costs that may come as a surprise. To avoid being caught off guard when closing on your home, it is essential to comprehend what closing costs entail and budget accordingly.
What Are Closing Costs?
People are sometimes surprised by closing costs because they don’t know what they are. 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 . . .”
Freddie Mac explains that closing costs refer to the fees and payments related to a transaction. These costs can vary based on the location and situation, but usually involve the following according to Freddie Mac.
- Government recording costs
- Appraisal fees
- Credit report fees
- Lender origination fees
- Title services
- Tax service fees
- Survey fees
- Attorney fees
- Underwriting Fees
How Much Will You Need To Budget for Closing Costs?
It is crucial to not only understand what closing costs consist of but also to know how much you need to budget to cover them. According to Freddie Mac, closing costs typically range from 2% to 5% of the total purchase price of the home. For instance, if you are considering purchasing a home for the median price of $366,900, the closing costs could range from about $7,500 to $18,500.
It’s important to note that if you are purchasing a home outside of this price range, your closing costs will be higher or lower accordingly.
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.”
To determine the exact amount you need to budget for closing costs, it is advisable to work with a team of reliable real estate professionals. Your agent can assist in connecting you with a lender, and together, the team of experts can provide answers to any inquiries you may have.
Bottom Line
Planning for the fees and payments that are involved in the closing process is crucial. We are here to connect with you and provide assistance to ensure that you feel confident throughout the process.
Find out why Kaya Homes is the leader in Long Island Real Estate and are your go-to realtor in the Lynbrook, Oceanside, Malverne, Hewlett, Valley Stream, East Rockaway, Woodmere, Cedarhurst, Baldwin, North Woodmere, Woodsburgh, Hewlett Neck Hewlett Harbor, Bellmore,Wantagh,Merrick and Freeport area.
Tue, 14 Feb 2023 18:30:17 +0000
by Mottek Group