If you are looking for a new home and you have saved up for a down payment, you should also be sure you have enough saved for closing costs. According to Freddie Mac, closing costs are usually between 2 and 5% of your purchase price. Keeping Current Matters has some information you should know about your closing costs so you aren’t surprised on closing day when you have to pay thousands of dollars.
Many first-time homeowners are unaware of how much closing costs can be. Someone with a low down payment program could end up paying the same amount on closing costs as they would on the down payment.
Here is a list of some of the fees/costs that could be included in your closing costs, depending on where the home is located:
- Government recording costs
- Appraisal fees
- Credit report fees
- Tax service fees
- Survey fees
- Attorney fees
- Underwriting Fees
It is possible in some cases to avoid paying closing costs. Talk to your lender and real estate agent to see if you can decrease or defer these costs. No-closing mortgages are available however they end up costing you more because of higher interest rates or the closing costs are added to the total cost of the mortgage. This means you would end up paying interest on the closing costs. Buyers can negotiate with the seller over the fees and sometimes the seller will agree to pay them in order to close the deal.