Before you decide to buy a home, it’s important to plan for all the costs you’ll be responsible for. While you’re busy saving for the downpayment, don’t forget you’ll want to save for closing costs too.
Hey hey hey! I’m Anita L Williamson, Associate Broker with James River Realty Group.
And here’s some helpful information on what those costs are and how much you should budget for them.
What encompasses closing costs?
A recent article from Bankrate explains: “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 . . .”
Simply put, your closing costs are the additional fees and payments you have to make at closing. According to Freddie Mac, while they can vary by location and situation, closing costs typically include:
- Government recording costs
- Appraisal fees
- Credit report fees
- Lender origination fees
- Title services
- Tax service fees
- Survey fees
- Attorney fees
- Underwriting Fees
How much are closing costs?
According to the same Freddie Mac article mentioned above, they’re 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 budget.
Let’s say you find a home you want to purchase at today’s median price of $384,500 (three hundred eighty-four thousand and five hundred dollars). Based on the 2-5% Freddie Mac estimate, your closing fees could be between roughly $7,690 and $19,225.
But 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. Also, when you speak to a lender they will be able to narrow this range down significantly so you truly know how much you need to have for your situation.
Before you make an offer on a home you need to make sure you’re prepared to close. Freddie Mac provides great advice for homebuyers, saying: “As you start your home buying journey, take the time to get a sense of all costs involved – from your down payment to closing costs.”
The best way to do that is by hiring a trusted real estate agent and having a buyer consultation. This will help you understand how much you’ll need to save and what you’ll want to be prepared for. It also means you have go-to resources for any questions that pop up along the way.
If you are ready to discover how much you will need to buy a home, reach out, and let’s schedule a buyer consultation. Planning for the fees and payments you’ll need to cover when you’re closing on your home is important.
I’m Anita L Williamson helping you establish roots in Central Virginia.
