
Now that you’ve decided to buy a home, it’s time to understand closing costs. Closing costs are the normal costs associated with the homebuying process that many buyers overlook. And while your down payment is probably the number one expense on your mind, you don’t want to forget about these costs. Here’s what you need to know about closing costs.
What Are Closing Costs?
Simply put, your closing costs are the additional fees and payments you have to make at closing. And while they’ll vary based on the price of the home, area, and how it’s being financed, closing costs are a part of every real estate transaction. Even so, they sometimes come as a surprise.
It’s just that some people forget to budget for them, and some agents forget or fail to educate the buyers about the costs of buying a home. According to Freddie Mac, this part of the homebuying process typically includes:
- Application fees
- Credit report fees
- Loan origination fees
- Appraisal fees
- Home inspection fees
- Title insurance
- Homeowners insurance
- Survey fees
- Attorney fees
I understand that this list can see somewhat overwhelming and confusing. Just one more reason to work with an experienced real estate broker and loan officer. Some of these costs are one-time expenses that are baked in. Others, like homeowners’ insurance, are initial installment payments for ongoing responsibilities you’ll have once you take possession of the home.
How Much Are Closing Costs?
One of the first questions buyers usually ask me is “how much are closing costs?” That’s a great question, and the answer is… it depends. The same Freddie Mac article that I mentioned above goes on to say:
“Closing costs vary greatly depending on your location and the price of your home. Typically, you should be prepared to pay between 2% and 5% of the home purchase price in closing fees.”
With that in mind, here’s how you can get an idea of what you’ll need to budget in the Roseburg OR area. Let’s say you find a home you want to purchase at today’s Douglas County OR median price of $324,900. Based on the 2-5% Freddie Mac estimate, your closing fees could be between roughly $6,498 and $16,245.
But keep in mind, if you’re in the market for a home above or below this price range, your numbers will be higher or lower. I know that’s a lot of extra money, but these are the typical costs included when buying a home. There are ways to reduce the closing costs burden on you though.
Tips To Reduce Your Closing Costs
If you’re wondering if there’s any way to inch those closing costs down a bit, NerdWallet lists a few things that could help:
- Negotiate with the Seller: Often times the sellers are willing to cover all or part these expenses — especially since home buying craze isn’t as intense and homes are staying on the market little longer now. We’re seeing sellers with a higher level of motivation, which opens them to more negotiation and compromise. I have had a lot of success getting sellers to agree to concessions, so don’t hesitate to ask.
- Shop Around for Home Insurance: Since rising home insurance is a challenge in many areas of the country right now, take the time to shop around and get a clear picture of all your hazard insurance options. Each insurance company offers their own policies and coverage, so get multiple quotes and see how they compare. Choosing a policy that provides reliable coverage at a competitive premium can make a big difference.
- Look into Closing Cost Assistance: Just like there are programs out there to help with your down payment, options exist to get support with closing costs too. While they’ll vary by area, there are programs for various income levels, certain professions, and specific towns or neighborhoods too. If you want to learn more, contact me here. Experian says:
“Your real estate professional should be able to steer you toward applicable programs, and the U.S. Department of Housing and Urban Development (HUD) maintains a helpful resource for finding homebuying assistance programs in every state.”
Bottom Line
Understanding what you need to know about closing costs is an important part of the home buying planning. Just understanding what the fees and payments are and how much they could be will really help you structure and acceptable offer that you’ll be happy with. With the right experts on your side, you can make sure you’re prepared. Let’s connect so you have someone you can go to for more tips and advice.