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. Schedule a Zoom Meeting with Steve!📅 Want to stay updated? Join our VIP Email List!      

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Why Pricing Your House Appropriately Matters

Last year, the housing market slowed down in response to higher mortgage rates, and that had an impact on home prices. If you’re thinking of selling your house soon, that means you’ll want to adjust your expectations accordingly. In a more moderate market, how you price your house will make a big difference to not only your bottom line, but to how quickly your house could sell. And the reality is, homes priced right are still selling in today’s market. Especially today, your asking price sends a message to potential buyers. If it’s priced too low, you may leave money on the table or discourage buyers who may see a lower-than-expected price tag and wonder if that means something is wrong with the home. If it’s priced too high, you run the risk of deterring buyers. When that happens, you may have to lower the price to try to reignite interest in your house when it sits on the market for a while. But be aware that a price drop can be seen as a red flag by some buyers who will wonder what that means about the home. To avoid either headache, price it right from the start. The Porter Group knows how to determine that ideal asking price. They balance the value of homes in your neighborhood, current market trends, buyer demand, the condition of your house, and more to find the right price. This helps lead to stronger offers and a greater likelihood your house will sell quickly. The visual below helps summarize the impact your asking price can have: Homes that are priced at current market value are still selling. To make sure you price your house appropriately, maximize your sales potential, and minimize your hassle, let’s connect. Schedule a Zoom Meeting with Steve!📅 Want to stay updated? Join our VIP Email List!

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Avoid the Rental Trap in 2023

If you’re a renter, you likely face an important decision every year: renew your current lease, start a new one, or buy a home. This year is no different. But before you dive too deeply into your options, it helps to understand the true costs of renting moving forward. In the past year, both current renters and new renters have seen their rent go up based on information from realtor.com:   “Three out of four renters (74.2%) who have moved in the past 12 months reported seeing their rent increase. The strain from recent rent hikes isn’t exclusive to renters who have recently moved. Nearly  two-thirds of renters (63.2%) who have lived in their current rental between 12 and 24 months, and likely renewed their lease, have also reported increases in their rent.” And if you look back at historical data, that shouldn’t come as surprise. That’s because, according to the Census, rents have been rising fairly consistently since 1988 (see graph below): So, if you’re considering renting as an option in 2023, it’s worth weighing whether this trend is likely to continue. The 2023 Housing Forecast from realtor.com expects rents will keep climbing (see graph below): That forecast projects rents will increase by 6.3% in the year ahead (shown in green). When compared to the blue bars in the graph, it’s clear that the 2023 projection doesn’t call for an increase as drastic as the ones renters have seen over the past two years, but it’s still above the historical average for rent hikes between 2013-2019. That means, if you’re planning to rent again this year and you’ve not yet renewed your lease, you may pay more when you do. Homeownership Provides an Alternative to Rising Rents These rising costs may make you reconsider what other alternatives you have. If you're looking for more stability, it could be time to prioritize homeownership. One of the many benefits of owning your own home is it provides a stable monthly cost that you can lock in for the duration of your loan. As Freddie Mac says: “Monthly rent payments may increase over time, but a fixed-rate mortgage will ensure that you're paying the same amount each month. With a fixed-rate mortgage, your interest rate is locked in for the life of loan. Steady payments allow you to budget wisely and make plans for the future.” If you’re planning to make a move this year, locking in your monthly housing costs for the duration of your loan can be a major benefit. You’ll avoid wondering if you’ll need to adjust your budget to account for annual increases like you would if you left your housing payment up to your landlord and their renewal cycle. Homeowners also enjoy the added benefit of home equity, which has grown substantially. In fact, the latest Homeowner Equity Insight report from CoreLogic shows the average homeowner gained $34,300 in equity over the last 12 months. As a renter, your rent payment only covers the cost of your dwelling. When you pay your mortgage on a house, you grow your wealth through the forced savings that is your home equity. If you’re thinking of renting this year, it’s important to keep in mind the true costs you’ll face. Let’s chat to see how you can begin your journey to homeownership today. Schedule a Zoom Meeting with Steve!📅 Want to stay updated? Join our VIP Email List!

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