What are closing costs anyway?
Simply stated, Closing Costs are your acquisition costs - the costs and fees associated with purchasing your new home.
HOW MUCH ARE CLOSING COSTS?
They typically range from 3-5% of the home’s purchase price. Depending on the market conditions and specific negotiations, you may be able to finance these costs, by building them into the loan. When this happens, you pay the seller 3-5% more for the home, and they ‘pay your closing costs’. When this happens, it’s referred to as Seller Paid Closing Costs. The Closing Costs & Fees below are paid at closing, in addition to your down payment.
CLOSING COSTS BREAK DOWN INTO THESE 5 BUCKETS:
Bank Fees: Loan Origination Fee, Discount Points, Rate Buydown, Commitment Fee, Underwriting Fee, Processing Fee, etc.
Vendor Fees: Appraisal, Credit Report, Flood Determination Fee, Tax Service Fee, Condo Questionnaire, etc.
Government Fees: Recording Fee, Mortgage Registration Tax, Conservation Fee, Transfer Taxes, etc.
Title Fees: Settlement / Closing Fee, Title Insurance Premium, Title Examination Fee, Owner’s Insurance, Wire Fees, etc.
Other Fees: Broker Admin Fees, Homeownership Education Fee, HOA Dues, Escrow Fees, etc.
PREPAID EXPENSES
While not technically considered a Closing Cost, Prepaid Expenses are often lumped in with Closing Costs. These include: Hazard Insurance, Flood Insurance, Association Dues, Tax Escrow, Taxes due at closing, etc.
