Buying a Home - Closing Costs
Closing costs are the various fees and expenses incurred during the finalization of a real estate transaction. These costs typically range from 2% to 5% of the loan amount and can include a variety of charges. Here's a breakdown of common closing costs when buying a home:
1. Loan Origination Fees: These are fees charged by the lender for processing the loan application, usually around 1% of the loan amount.
2. Appraisal Fee: The cost of having the property professionally appraised to determine its market value, typically ranging from $300 to $500.
3. Home Inspection Fee: The cost of having a professional inspector examine the property for any potential issues, usually between $300 and $500.
4. Title Search and Title Insurance: Fees for the title search to ensure there are no outstanding claims or liens on the property, and for the title insurance to protect against future claims. Miscellaneous title fees can vary but title rates are based off the sales price of the home.
5. Attorney Fees: If you hire a real estate attorney to review documents and handle the closing process, these fees will vary.
6. Survey Fee: The cost of a property survey to verify property boundaries, typically in the average neighborhood fees range between $300 and $700.
7. Prepaid Costs: These include prepaid interest, property taxes, and homeowners insurance premiums. The exact amounts can vary based on the time of year and the specific terms of your loan and insurance policies.
8. Recording Fees: Fees charged by the local government to record the transaction in public records, usually between $50 and $150.
9. Mortgage Insurance: If your down payment is less than 20%, you might need to pay for private mortgage insurance (PMI) upfront, which can vary significantly based on the loan amount and other factors.
10. Transfer Taxes: Taxes imposed by the state or local government on the transfer of property ownership, which can vary widely depending on the location.
11. Underwriting Fee: A fee charged by the lender for underwriting the loan, typically between $400 and $900.
It's important to review the closing disclosure provided by your lender, which will detail all the closing costs and give you a clear picture of what you'll need to pay at closing. Additionally, some of these costs may be negotiable or shared between the buyer and the seller, so it's worth discussing with your real estate agent or attorney.
