What Are Closing Costs (When Buying a Home)?
One of the most important steps when starting your home search is to get your finances in order. That includes making sure you have enough money saved for the closing costs. You may have heard the term “closing costs” as you looked into the home-buying process, but what exactly does that mean?
Closing costs are the fees that are paid at the close of escrow such as the lender and escrow fees. Typically they range from 1.5-3% of the purchase price, but can vary depending on the type of loan you get. For instance, certain loans require that 6 months of taxes be collected in advance, as part of the closing costs.
At first glance, these fees may seem a bit daunting, but don’t worry! Once you speak with a lender and we open escrow, you will receive an estimated fee sheet that breaks down all of the closing costs for you to review. This way, you can go over any questions you may have with the lender, and get a general idea of how much funds you will have to bring in at the time of closing.
We have many clients ask us,
“How much do I have to pay out of pocket to buy a house?”
While each scenario is different, the general formula to remember when purchasing a home is this:
Down Payment + Closing Costs = Total You Have to Bring In at Close of Escrow
If you’re like most people, buying a home is a huge financial jump. For many (especially if you are a first-time homebuyer), it can seem stressful to navigate through the process. But that’s why we’re here for you!
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