Don’t forget to budget for closing costs!
There are many expenses to consider when buying a home. Of course, you are conscious of the sale price and the down payment required to get a loan. But one expense that often causes sticker shock at the last moment is the closing costs required to get a mortgage.
So what are closing costs and how much are they?
According to Trulia:
“When you close on a home, a number of fees are due. They typically range from 2% to 5% of the total cost of the home, and can include title insurance, origination fees, underwriting fees, document preparation fees, and more.”
For example, if you are buying a $300,000 home, you could potentially have between $6,000 and $15,000 in closing fees. That’s a big chunk of change when it comes to saving for that dream home!
Your agent and lender can help you understand what all these fees mean. It’s helpful to get an estimate as early as you can, so you’re not caught unprepared for the extra money needed at the closing table.
A closing disclosure document should be available about three days before closing, and it will outline your loan terms, final closing costs, and any outstanding fees. Your agent will also examine it for any discrepancies or errors. Questions or concerns can be addressed with the lender and/or title company.
Bottom Line
With rising home prices and bidding wars, it’s more important than ever to make sure your buying plan includes budgeting for closing costs. Work with your lender and your real estate professional to be sure you have everything ready to move quickly and efficiently towards that dream home purchase.