What Can I Expect To Pay In Closing Costs?

 

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When planning to buy your dream home, don’t forget the costs that go beyond the price agreed upon by buyer and seller. Closing costs often come as a surprise to purchasers who are first time home buyers, or those who haven’t bought a home in several years. And it’s no small potatoes when you add up the costs paid to lenders, title companies, appraisers, inspectors, home owners associations, and government entities that may collect taxes and fees in advance. While it’s impossible to  calculate exactly what your closing costs will be until all of the details have been worked out by your lender,  you can generally count on landing somewhere in the ballpark of  3 to 5 percent of the purchase price. Soon, due to the efforts of the federal Consumer Finance Protection Bureau (CFPB), home buyers will have more detailed, easier to understand information about their closing costs much earlier in the process. While there is a lot of debate right now about whether this government regulation is a good or bad thing, in the long run I’m all for giving consumers as much information as possible, as early as possible, as to where THEIR money is going and why. A good Realtor, while not able to give an exact closing cost amount, should, by the time a contract is accepted, give the buyer a reasonable estimate of what their closing costs will be. Here is a general breakdown of estimated closing costs on a $250,000 home:

Fixed Closing Costs  Estimates (those items not likely to change based on the timing of the purchase)

Title Policy (paid to title company):                   750.00

Escrow fees (paid to the title company)             450.00

Loan origination fees (paid to lender)             2500.00

Recording Fee (County)                                          80.00

Processing Fee (Lender)                                        350.00

Tax Service Fee (Lender/Tax Service)                100.00

Document Preparation fee (Lender)                   350.00

Underwriting (Title or Lender)                           200.00

Endorsements (Title)                                            100.00

Flood Certification  (Lender)                                 40.00

Credit Report (Lender)                                           60.00

CPL (Closing Protection Letter – Title)               25.00

HOA Transfer fees                                                 400.00

Prepaids (example)

14 months of homeowners insurance              1150.00

4 months of taxes                                                   833.00

15 days of interest                                                  385.00

Fees paid outside of closing

Appraisal                                                                 450.00

Home Inspection                                                   350.00

Termite Inspection                                                  65.00

Home Warranty                                                    500.00

Total Closing costs                                              9138.00

A good Realtor will help you cut down those closing costs by putting you in touch with a great lender and title company that work to keep your costs low, negotiating seller concessions to defray your outlay of cash, and help you time your closing to cut down on unnecessary expenses. The closing cost estimate above factors in none of those negotiations and therefore is what you might pay without the assistance of a real estate professional.