What Closing Costs Are There for Homebuyers?
Here’s a breakdown of all the closing costs in a home purchase.
If you’re planning on buying a home this year, closing costs could have a major impact on your budget. What are they and how much are they going to cost you?
"Title insurance can cost anywhere from a few hundred to a few thousand dollars."
On average, closing costs add up to about 4% of the home’s value. It's nothing to sneeze at, and you need to be prepared. Here’s how the closing costs break down:
• The loan origination fee includes things like courier fees, underwriting fees, appraisal cost, administrative fees, and more. This can range anywhere from 0.5% to 1% of the loan amount.
• The application fee includes the cost of running your credit, the application process, and additional administrative fees. These can run anywhere from $300 to $500.
• The mortgage brokerage fee is charged at the end of the mortgage process and is usually between 0.5% and 2.75% of the home’s purchase price, depending on the brokerage.
• If your loan is insured by the FHA, they charge an upfront premium of 1.75% on the loan amount.
• Property taxes range anywhere from $5,000 to $8,000, and some lenders require homeowners insurance that covers the property in case of damage and that can range from $800 to $1,200.
• The title search fee covers all available information about the property, including any claims or liens on the home. This can cost you between $75 and $200. Title insurance also keeps you from financial loss and can cost somewhere from a few hundred to a few thousand dollars.
If you’re interested in purchasing a house, you should first be aware of all the costs of buying a home. The best way is to talk to a Realtor or lender who can break the fees down for you. If you have any questions about this topic or anything else related to real estate, don’t hesitate to reach out to me. I look forward to hearing from you soon.