Depending on where you live, the price of your home, your lender’s terms, the distribution of fees charged to buyer and/or seller, and other factors, your closing costs on the purchase of a home may range anywhere between 3% and 7% of the home price, sometimes more or less.
Typical buyers’ closing charges include:
- Loan origination fee, usually 1% of your mortgage amount
- Discount point (or points), each usually 1% of your mortgage amount
- Assumption fee (if you assume the seller’s old mortgage)
- Title search fee
- Lender’s title insurance fee
- Owner’s title insurance fee (most often paid for by the Seller)
- Survey fee (if applicable)
- Two fees that may have been paid when you applied for your loan:
- Appraisal fee
- Credit report fee
- Lender’s inspection fee
- Recording fees
- Prepaid interest on your mortgage, covering the time between settlement and the first regular monthly payment
- Prepaid mortgage insurance premium
- Property tax, possible reimbursement to seller and/or payment on future taxes
- Assessment, possible 1-to-3-month local improvement charge or association fee (especially applicable to condominium buyers)
- Lawyer’s fees (if applicable)
Your lender must, by law, supply you with a pre-settlement “Good Faith Estimate.” It will not necessarily identify all actual costs. At settlement, however, you receive a “Settlement Statement” that contains all the specific actual charges.
Since occasional unexpected costs may surface at settlement, it is well to be prepared for possible $200 or $300 in extras at your closing. Extra costs usually involve partial payments for items you had not previously considered but, at closing, wish to pay for: fuel oil left in the seller’s tank, firewood, continuation of lawn service, or the purchase of a major appliance.
Since actual costs vary, call or e-mail us for typical figures in your area. Your calls and e-mails are always welcome.