When it comes to purchasing a home, there’s more to the purchase price than the down payment and mortgage premium. Before you get the keys, you also have to pay closing costs.
With that said, if you’re curious about the amount of closing costs for a house, take a look at the information below.
How Much Are Closing Costs?
Closing costs are generally between 2% and 5% of the home’s purchase price. For instance, if the home is $300,000, then the closing costs would be between $6,000 to $15,000. The fees for closing differ depending on your state, mortgage lender, and what type of loan you have.
The closing costs for a house are necessary to make sure that all parties involved with the home’s buying process are taken care of. In some states, additional inspections are required, as well as property taxes, transfer taxes, insurance, and other fees.
Common Closing Costs Fees
At closing, all the fees will be listed on your loan estimate and closing disclosure. Below are some of the basic fees you can always expect:
Application fee: You’ll likely have a loan application fee for the lender to process your mortgage application.
Attorney fee: You’ll also have to pay the real estate attorney to prep and review your home purchase agreements and contracts. However, every state doesn’t require an attorney.
Closing fee: A closing fee, also known as an escrow fee, is paid to the organization who handles the closing. This is usually the title company, escrow company, or attorney.
Credit report fee: There’s a $15 to $30 charge from the lender to pull your credit report from all three bureaus. But some lenders won’t charge this fee if they get a discount from the credit reporting agencies.
Homeowners insurance: A lender requires prepayment for the first year of homeowners insurance at closing.
Led-based paint inspection: There’s a fee for paying an inspector to come out and make sure that the property doesn’t have dangerous lead-based paint.
Pest inspection fee: You have to pay additional costs for a professional pest control inspector to look for termites and other pests. This is only required in certain states.
Property tax: One of the main closing costs for a house is property tax. At closing, you’ll have to pay pro-rata property taxes which are due within two months of the home’s purchase.
Underwriting fees: Underwriting fees are charged by the lender for the application evaluation and loan approval. The underwriting process involves verifying your income, employment, credit, and other financial information.
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Understanding the Closing Costs for a House
Knowing all of the closing costs for a house will help you prepare your finances for closing day. However, if you take your time and compare lender fees, you can significantly reduce your upfront costs.
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