What Every Homebuyer Should Know About Closing Costs

<article class="post-983896 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-983896"><span class="entry-date">March 25, 2024</span><div class="entry-header center-block text-center"><h1 class="entry-title">What Every Homebuyer Should Know About Closing Costs</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=What+Every+Homebuyer+Should+Know+About+Closing+Costs&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fwhat-every-homebuyer-should-know-about-closing-costs%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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</div></div><div class="post-tax post-category"><span></span><a href="../category/realtor-blog/index.html" rel="tag">Realtor Blog</a></div><div class="post-tax post-post_tag"></div></div><div class="entry-content"><div><img alt="What Every Homebuyer Should Know About Closing Costs Simplifying The Market" decoding="async" loading="lazy" src="https://media.agentaprd.com/sites/222/20240325-What-Every-Homebuyer-Should-Know-About-Closing-Costs.webp" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width="358"/>
<p>Before making the decision to <a href="https://www.simplifyingthemarket.com/2024/02/20/strategic-tips-for-buying-your-first-home/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">buy</a> a home, it’s important to plan for all the costs you’ll be responsible for. While you’re busy saving for the <a href="https://www.simplifyingthemarket.com/2024/02/26/the-truth-about-down-payments/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">down payment</a>, don’t forget you’ll want to prep for closing costs too.</p>
<p>Here’s some helpful information on what those costs are and how much you should budget for them.</p>
<h4><strong>What Are Closing Costs?</strong></h4>
<p>A recent article from <em>Bankrate</em> <a href="https://www.bankrate.com/mortgages/understanding-the-closing-process/" rel="noopener noreferrer" target="_blank">explains</a>:</p>
<blockquote><p><em>“</em><strong><em>Closing costs are the fees and expenses you must pay before becoming the legal owner of a house, condo or townhome</em></strong><em> . . . Closing costs vary depending on the purchase price of the home and how it’s being financed . . .”</em></p></blockquote>
<p>Simply put, your closing costs are the additional fees and payments you have to make at closing. According to <a href="https://myhome.freddiemac.com/buying/understanding-costs" rel="noopener noreferrer" target="_blank"><em>Freddie Mac</em></a>, while they can vary by location and situation, closing costs typically include:</p>
<ul>
<li>Government recording costs</li>
<li>Appraisal fees</li>
<li>Credit report fees</li>
<li>Lender origination fees</li>
<li>Title services</li>
<li>Tax service fees</li>
<li>Survey fees</li>
<li>Attorney fees</li>
<li>Underwriting Fees</li>
</ul>
<h4><strong>How Much Are Closing Costs?</strong></h4>
<p>According to the same <em>Freddie Mac</em> <a href="https://myhome.freddiemac.com/buying/understanding-costs" rel="noopener noreferrer" target="_blank">article</a> mentioned above, they’re typically between 2% and 5% of the total purchase price of your home. With that in mind, here’s how you can get an idea of what you’ll need to budget.</p>
<p>Let’s say you find a home you want to purchase at today’s <a href="https://www.nar.realtor/newsroom/existing-home-sales-vaulted-9-5-in-february-largest-monthly-increase-in-a-year" rel="noopener noreferrer" target="_blank">median</a> price of $384,500. Based on the 2-5% <em>Freddie Mac</em> estimate, your closing fees could be between roughly $7,690 and $19,225.</p>
<p>But keep in mind, if you’re in the market for a home above or below this price range, your closing costs will be higher or lower.</p>
<h4><strong>Make Sure You’re Prepared To Close</strong></h4>
<p><em>Freddie Mac</em> provides great advice for homebuyers, <a href="https://myhome.freddiemac.com/buying/understanding-costs" rel="noopener noreferrer" target="_blank">saying</a>:</p>
<blockquote><p><em>“As you start your homebuying journey, </em><strong><em>take the time to get a sense of all costs involved</em></strong><em> – from your down payment to closing costs.”</em></p></blockquote>
<p>The best way to do that is by partnering with a team of trusted real estate professionals. That gives you a group of experts to help you understand how much you’ll need to save and what you’ll want to be prepped for. It also means you have go-to resources for any questions that pop up along the way.</p>
<h3>Bottom Line</h3>
<p>Planning for the fees and payments you’ll need to cover when you’re closing on your <a href="https://www.simplifyingthemarket.com/2024/02/09/winning-plays-for-buying-a-home-in-todays-market-infographic/" rel="noopener noreferrer" target="_blank">home</a> is important. Partnering with a local real estate professional can give you the guidance and confidence you need throughout the process.</p>
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