Understanding closing costs can be challenging, but the Better Rate Mortgage Team is here to help!
When buying a home, your down payment isn’t the only thing you’ll need to bring to the closing table. Closing costs are an expense you’ll have to pay to your lender in exchange for loan services.
It’s not uncommon for first-time homebuyers to underestimate how much they’ll need to pay in closing costs. They also might not know that there are ways to lower the cost.
What are Closing Costs?
First things first, what are closing costs? They are fees paid to the lender at the closing or end of a real estate transaction. They are incurred by either the seller or the buyer. Closing costs cover things such as your home appraisal and searches on your home’s title. The specific amount you’ll pay depends on the type of loan you choose and where you live.
Here are answers to some frequently asked questions about closing costs:
- How much are closing costs? They typically make up about 3-6% of the home price. For instance, if you take out a mortgage for $200,000, you can expect closing costs to be $6,000-$12,000.
- What is the average closing cost amount? Homebuyers in the U.S. pay an average of $5,750, including taxes.
- Who pays closing costs? The buyer and seller both pay. However, the buyer generally pays most of them. It’s possible to negotiate the cost with the seller; this is known as seller concessions.
- Why are closing costs necessary? Buying a house is a somewhat complicated process with several players involved and several moving parts. Some states and types of loans require certain inspections beyond the basic home inspection. In addition, there are property and transfer taxes, insurance coverage, and various additional fees.
- Can you reduce the amount of the closing costs? Yes, there are ways to negotiate these fees.
Ways to Lower Your Mortgage Closing Cost
The cost of closing on a mortgage can add up quickly. It’s easy for the final tally to reach the thousands of dollars between application fees, appraisal costs, and insurance fees. Fortunately, there are many ways to lower your closing costs. Some of these include:
- Negotiate your fees
- Ask the seller to cover some of the costs
- Buy a less expensive home
- Consider a “No-Closing Costs” home loan
- Contact the Sean Z Team for help
Ready to Buy a House?
If you’re ready to buy a home, the Better Rate Mortgage team is here to answer all your questions and
take the time to find the right mortgage with a payment you can afford. Our team is just as excited about your new home purchase as you are. We are proud to be a part of such a monumental milestone in your life and are dedicated to ensuring that it is an enjoyable experience.