Budgeting For Closing Costs
๐๐๐ญโ๐ฌ ๐ญ๐๐ฅ๐ค ๐๐๐จ๐ฎ๐ญ ๐๐ฅ๐จ๐ฌ๐ข๐ง๐ ๐๐จ๐ฌ๐ญ๐ฌ.
When purchasing a home, everyone knows you need a down payment, but many people donโt realize that in addition to your down payment, more funds are needed to cover your closing costs. Closing costs can include title insurance, tax and utility reimbursements, transfer tax, conveyancing fees, and miscellaneous smaller fees for services like notaries and wire transfers. If you are getting a mortgage, your lender could also require funds to be held in escrow for taxes and insurance, and charge underwriting and application fees.
So how much should you budget for closing costs? I typically tell my buyers to budget anywhere from3-4% ๐ฐ๐ง ๐ต๐ฉ๐ฆ ๐ค๐ฐ๐ด๐ต ๐ฐ๐ง ๐ต๐ฉ๐ฆ ๐ฉ๐ฐ๐ฎ๐ฆ. Here is a quick breakdown of what you may need to factor into your total out of pocket when buying a home:
โข ๐ฐ๐๐๐๐๐๐๐๐ ๐ต๐๐: $400-500โฃ โข U๐๐๐๐๐๐ ๐๐๐๐๐๐ ๐๐๐ ๐๐๐๐๐๐๐๐๐๐๐ ๐๐๐๐:$1000-$2000 โข ๐๐๐๐๐ ๐๐๐๐๐๐๐๐๐: 0.5-1% of the purchase price โฃโข ๐๐๐๐๐๐๐๐ ๐๐๐ก: 1-2.5% of the loan (this is sometimes split between buyer and seller)โฃ โฃโข ๐ผ๐๐๐๐๐๐๐ ๐๐๐๐๐๐๐๐๐: 0.5-1.5% of the loanโฃ โฃโข ๐ฟ๐๐๐๐๐๐๐: typically a full year of your property taxes and homeowners insurance are required upfront) โฃโข ๐ฐ๐๐ข ๐ท๐พ๐ฐ ๐๐๐๐โฃ ๐๐ ๐๐๐๐๐๐๐ ๐๐๐๐๐๐๐๐๐๐๐๐๐
As home prices are rising and more buyers are finding themselves competing in bidding wars, itโs more important than ever to make sure your plan includes budgeting for closing costs. Keep in mind that these fees vary depending on location, loan program, and lender.
If youโre thinking about buying and wondering what your fees might be, send me a message โ I would be happy to put together an estimate for you!
Serenity Barren
The Unicorn of Real Estate
Real People Realty
ID# 475191318
312-933-6203