Calculating Closing Costs

Before making the decision to buy a home, it's important to plan for all the costs you’ll be responsible for. While you're busy saving for the down payment, don't forget to prep for closing costs. Here’s some helpful information on what those costs are and how much you should budget for them.

What Are Closing Costs?

Simply put, your closing costs are the additional fees incurred during the home-buying process that are due before closing day. According to Freddie Mac, while they can vary by location and buying situation, closing costs typically include:

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

How Much Are Closing Costs?

According to the same Freddie Mac article mentioned above, they’re 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 budget.

Let’s say you find a home you want to purchase at today’s national median price of $384,500. Based on the 2-5% Freddie Mac estimate, your closing fees could be between roughly $7,690 and $19,225.

Keep in mind that these costs will vary significantly by location, home type, and also depending on how you finance the home purchase. Hence, the wide estimation range of 2-5% of the purchase price. As you nail down your home type, price range, and buying situation, you'll have a better idea of closing costs to base your financial planning. 

Make Sure You’re Prepared To Close

“If you're in the market to buy a home, your down payment is probably top of mind. And rightly so — it's likely the biggest cost of homebuying. However, it is not the only cost and it's critical you understand all your expenses before diving in.

The best way to do that is by partnering with a team of trusted real estate professionals, ie. Realtors, lenders, title companies, etc. This gives you a group of experts to help you understand how much you’ll need to save and what you’ll want to be prepped for. It also means you have go-to resources for any questions that pop up along the way.

Because, after all, buying a home should spark a "happy dance," not induce unforeseen financial stress. Need help getting started? We're here to answer your questions no matter what stage of the home-buying journey you're in. Don't hesitate to reach us at 239-472-1950 or [email protected]

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