When buying a home, it’s important to have a budget and make sure you plan ahead for certain homebuying expenses. Saving for a down payment is the main cost that comes to mind for many, but budgeting for the closing costs required to get a mortgage is just as important.
What Are Closing Costs?
According to Trulia:
“When you close on a home, a number of fees are due. They typically range from 2% to 5% of the total cost of the home, and can include title insurance, origination fees, underwriting fees, document preparation fees, and more.”
Pre-paids are another cost that add which is insurance, taxes, and mortgage insurance if required. For example, for someone buying a $300,000 home, they could potentially should have a budget between $6,000 and $15,000 in closing fees. The mortgage lender you have will be a huge factor in the cost as well. so be sure your working with one that doesn’t have high fees. If you’re in the market for a home above this price range, your closing costs could be greater. As mentioned above, closing costs are typically between 2% and 5% of your purchase price.
Trulia gives more great advice, explaining:
“There will be lots of paperwork in front of you on closing day, and not enough time to read them all. Work closely with your real estate agent, lender, and attorney, if you have one, to get all the documents you need ahead of time.
The most important thing to read is the closing disclosure, which shows your loan terms, final closing costs, and any outstanding fees. You’ll get this form about three days before closing since, once you (the borrower) sign it, there’s a three-day waiting period before you can sign the mortgage loan docs. If you have any questions about the numbers or what any of the mortgage terms mean, this is the time to ask—your real estate agent is a great resource for getting you all the answers you need.”
As home prices are rising and more buyers are finding themselves competing in bidding wars it is harder to get closing costs rolled into your loan, it’s more important than ever to make sure your plan includes budgeting for closing costs. Let’s connect to be sure you have everything you need to land your dream home. Reach out to me, Sabrina Shaw here at Homes by Sabrina as we are always glad to help.