Though it’s often exciting and a time full of promise and new beginnings, buying a home can also be stressful and fraught with unknowns and uncertainty. Whether it’s your first home, your “forever home,” or somewhere in between, home buying is likely the biggest purchase you’ll make.
The list can seem endless too, when it comes to cost. There are insurance costs, property taxes, potentially homeowners association fees, not to mention utility costs. And before those even begin, there are what’s known as closing costs when you close on the property. So how do you know what to expect from all these costs and fees? The good news is, at least when it comes to your closing, there are ways to estimate closing costs.
What Are Closing Costs?
The term “closing costs” refers to the fees associated with purchasing or refinancing a home. These fees are outside the downpayment buyers will put toward the purchase price of the home, and rather are made up of fees such as those charged by the lending institution for loan origination, application fee, credit check, etc. They may also include fees for an appraisal, property survey, title search, attorneys and more.
Some fees may be negotiable, while others may not be. Both buyers and sellers are typically subject to various closing costs, although buyers bear the burden of most closing fees. Closing costs are usually due at closing, though sometimes they can be rolled into the mortgage, depending on the terms offered by your lender.
How to Estimate Closing Costs
It can be difficult to understand exactly how much you’ll need to pay in closing costs prior to your actual closing on the property, but with a little research and planning ahead of time, there are a few ways to estimate these costs in advance. Here are some options you may want to consider for how to estimate closing costs:
- Estimate a percentage of the purchase price
Some experts suggest that the average closing costs may come in at around 2 – 5% of the purchase price of the home. For example, on a $200,000 home, that would put closing costs at anywhere from $4,000 to $10,000. Note that these ranges can vary widely though depending on a number of factors such as location, lending terms and type of loan.
- Refer to online calculators
Online resources abound when it comes to home buying, and among those resources are online calculators you can use to estimate your closing costs. By plugging in some basic information such as what state and county you’re purchasing in, along with your home purchase price, down payment, length of your loan and interest rate, you’ll come away with an estimate on what you can expect to pay for closing costs.
- Consult with the experts
Realtors who are seasoned pros in the location you’re purchasing your home will often have a great handle on what buyers might expect to pay for closing costs. Your lender is another expert source as they will be versed in the types of fees that you will need to plan for specific to your area and loan terms.
Take the Guesswork Out of Your Closing Costs
Buying a home can be stressful and expensive. Taking steps to arm yourself with information and knowledge ahead of time can help to alleviate some of that stress, and potentially help manage (or at least plan for) some of those expenses as well. Express Title & Closing is here to assist with your title service needs, including an “anytime-anywhere” closing policy commitment to customers and a free online calculator that uses actual fees, taxes and pricing for your property transaction so you’ll know how to estimate closing costs ahead of time. Contact us today or call 423-434-9200 to learn more now.
