You’ve done it – you are days away from signing the last documents on your first home purchase, and when you are reviewing the last of the financial documents, you see a line for closing costs. What are closing costs? How is the fee calculated? How much should you plan on saving for these costs before you buy your home?
What are Closing Costs?
Closing costs are made up of the fees associated with buying your home and paid at closing. The charges are made up of fees relating to the mortgage, including the appraisal, title work, paperwork, attorney fees, and the expense of underwriting your loan. These closing costs can be paid at the closing table by check and are separate from your down payment or earnest deposit.
How are the Closing Cost Fees Calculated?
Typically, home buyers will pay between about 2 to 5 percent of the purchase price of their home in closing fees, with the average buyer paying roughly $3,700 in closing fees, according to a recent survey https://www.bankrate.com. These costs vary widely from city to city and between states as the average costs of homes look very different depending on the region that you live in. Your lender will be able to give you a rough estimate on what your closing costs will be once your offer gets accepted and your loan begins processing, so there are no surprises at the closing table. As mentioned at the beginning of the article, days before the closing, your lender will provide you with a draft copy of the closing disclosure statement, which outlines fees and final payments due.
How Much Should You Plan on Saving?
This depends on what your home budget is. Take your projected home price and plan on saving at least the additional 5%, if not more; that way, you have extra money for other things that might pop up before closing, like buying a new couch or upgrading the security system.
Homeownership in Texas
With Beyond 404 Realty, Anthoney Hanks helps families and individuals in the Dallas-Fort Worth community find their dream home. Anthony specializes in working with first-time homebuyers in Texas and those looking to purchase investment properties in Texas. Anthoney will teach you how to become a homeowner, stop renting, and start buying! Visit www.beyond404realty.com for more information or visit our youtube page for short videos on starting the home buying process https://www.youtube.com/channel/UCmzTlxpC6-nJWXsphoqhPZw We can’t wait to work with you.
