The Ultimate Guide to Understanding Closing Costs in Real Estate

It's crucial to plan ahead before buying a home. While the majority of buyers think about how much money they will need to set aside for a down payment, many are surprised by the closing charges they must pay. You need to know what closing expenses are and how much you should budget for them so that you aren't caught off guard when it 's time to close on your home.

What is a Closing Cost?

Closing costs are fees and expenses that homebuyers pay in addition to the purchase price of a property. These costs can include a variety of fees, such as appraisal, title search, loan origination, and attorney fees, among others. Closing costs are an important consideration for homebuyers, as they can significantly impact the total cost of a home purchase. In this article, we will provide a comprehensive guide to closing costs, including the types of fees that homebuyers can expect to pay, how much they can expect to spend, and tips for reducing closing costs.

Types of Closing Costs

There are several types of closing costs that homebuyers may encounter, including:

🧾 Government recording costs
🧾 Appraisal fees
🧾 Credit report fees
🧾 Lender origination fees
🧾 Title services
🧾 Tax service fees
🧾 Survey fees
🧾 Attorney fees
🧾 Underwriting Fees

How Much Will You Need To Budget for Closing Costs?

Understanding what closing costs include is important, but knowing what you’ll need to budget to cover them is critical, too. According to the Freddie Mac article mentioned above, the costs to close are typically between 2% and 5% of the total purchase price of your home. With that in mind, here’s how you can get an idea of what you’ll need to cover your closing costs.

Let’s say you find a home you want to purchase for the median price of $366,900. Based on the 2-5% Freddie Mac estimate, your closing fees could be between roughly $7,500 and $18,500.

Keep in mind, if you’re in the market for a home above or below this price range, your closing costs will be higher or lower.

What’s the Best Way To Make Sure You’re Prepared at Closing Time?

Freddie Mac provides great advice for homebuyers:

“As you start your homebuying journey, take the time to get a sense of all costs involved – from your down payment to closing costs.”

Work with a the Porter Group to understand exactly how much you’ll need to budget for closing costs. We  can help connect with a lender, and together we can answer any questions you might have.

Planning ahead for the costs and payments you'll have to make at closing is crucial. Let's talk so I can give you the confidence you need to get through the procedure.

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