💰What homebuyers need to know about closing costs

Buying a home is exciting, but one part that often surprises buyers is closing costs. These are the fees and expenses needed to finalize your home purchase, typically ranging from 2-5% of the home’s price. For example, on a $300,000 home, closing costs might be between $6,000 and $15,000.

Here’s a quick breakdown of some common costs to expect: 

• Loan Origination Fees: Charged by the lender to process your loan
• Appraisal Fees: To assess the property’s value
• Home Inspection Fees: Ensures the home is in good condition before you buy
• Title Insurance: Protects you and the lender from property ownership disputes
• Escrow Fees: Covers the management of escrow accounts for taxes and insurance
• Prepaid Costs: Includes property taxes, homeowner’s insurance, and mortgage interest

While closing costs are necessary, here are some tips to help you reduce them:

1. Negotiate with the Seller: Ask if they’ll cover part of the costs.
2. Shop Around for Lenders: Some lenders offer better rates and lower fees.
3. Consider No-Closing-Cost Mortgages: Weigh the pros and cons of this option.
4. Close at the End of the Month: This reduces the amount of prepaid interest.

You can also roll these costs into your mortgage to avoid upfront payments, though this means a higher loan amount—and more interest over time. Compare options and understand your mortgage better here.

Understanding and preparing for these costs can help you budget better and make the process smoother. On closing day, you’ll review your final costs, sign the necessary documents, and officially get the keys to your new home!

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