What are Closing Costs?
Closing costs are all of the fees associated with buying a home beyond the home's purchase price. These costs can vary depending on the purchase price of the home, the location of the home, and the type of loan you're getting. However, first-time homebuyers can expect to pay between 2% and 5% of the purchase price of the home in closing costs.
Typical Closing Costs:
- Loan origination fee: This is a fee charged by the lender for processing and underwriting your loan.
- Appraisal fee: This is a fee paid to an appraiser to assess the value of the home.
- Home inspection fee: This is a fee paid to a home inspector to inspect the home for any defects or problems.
- Title Fees & Insurance: This insurance protects you from any financial losses that may occur due to problems with the title to the home.
- Recording fees: These are fees charged by the government to record the transfer of ownership of the home.
- Prepaid taxes and insurance: These are payments you'll make in advance for property taxes and homeowners insurance.
- PMI premiums: Private mortgage insurance (PMI) is a type of insurance that protects the lender in case you default on your loan. PMI premiums are typically required for borrowers who put down less than 20% on their home purchase.
- Escrow accounts: An escrow account is a type of account that is used to hold money for the purpose of paying certain bills, such as property taxes and homeowners insurance. Lenders typically require borrowers to set up an escrow account when they purchase a home.
- HOA Fees: if applicable; If you are considering buying a home in a community with an HOA, it is important to factor HOA fees into your budget. HOA fees can be a significant expense, but they can also be worth it if the community offers amenities that you value, such as a pool, clubhouse, or playground.
In addition to these common closing costs, there may be other fees associated with buying a home in your area. Be sure to talk to your mortgage loan advisor to get a detailed estimate of all of the closing costs you can expect to pay.
Home inspections and appraisals are paid out-of-pocket by the homebuyer during escrow. This is because these services are needed to assess the condition and value of the home before the lender will approve the loan.
Closing costs can be a significant expense, but they are an important part of the homebuying process. By understanding what closing costs are and what to expect, you can be better prepared for this expense and avoid any surprises.
Download my FREE Homebuyer's Guide to learn more about what closing costs are, what to expect, and how to save money.
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Luis Flores, The Black Eyed Agent
If you're looking for a real estate agent who will provide you with knockout service, look no further than The Black Eyed Agent. I'm a seasoned professional with a proven track record of success in helping buyers find their dream homes in the Greater Phoenix Area.
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As a seasoned real estate professional, I have a deep understanding of the local market and the latest trends. I can help you navigate the complex process of buying or selling a home with confidence.
Whether you're a first-time homebuyer or a seasoned investor, I have the knowledge and expertise to help you achieve your real estate goals. I'm also passionate about helping my clients find their dream home or sell their home for top dollar.
Luis Flores, Realtor® The Black Eyed Agent
Legacy Homes Real Estate Group
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