What are Closing Costs?
Many first-time homebuyers have reported that they went into the home process with little to no knowledge about closing costs. When saving for a down payment, keep in mind that your closing costs will equal anywhere between 2 – 5% of your purchase price. These fees include county recording fees, appraisal reports, credit reports, title services, escrow or settlement services, attorney fees, survey reports, taxes due, insurance premiums, and lender processing costs.
The good news is that your lender may be able to roll these costs into either your loan amount or your interest rate to reduce the out-of-pocket expense at loan closing. Make sure to ask your Mortgage Specialist about the best plan for you. Many first time homebuyers plan on moving to their next home in 3-5 years, so rolling their costs in makes more financial sense for a shorter term mortgage strategy.
For purchase transactions, partnering with a savvy real estate agent can also mean working the home seller to cover some of these costs.