{"id":5297,"date":"2021-12-13T09:30:34","date_gmt":"2021-12-13T16:30:34","guid":{"rendered":"https:\/\/www.realtyexecutives.com\/blog\/?p=5297"},"modified":"2021-12-10T16:39:47","modified_gmt":"2021-12-10T23:39:47","slug":"how-much-can-you-expect-to-pay-in-closing-costs","status":"publish","type":"post","link":"https:\/\/www.realtyexecutives.com\/blog\/how-much-can-you-expect-to-pay-in-closing-costs","title":{"rendered":"How Much Can You Expect to Pay in Closing Costs"},"content":{"rendered":"\n<div class=\"wp-block-image\"><figure class=\"alignright\"><img decoding=\"async\" loading=\"lazy\" width=\"450\" height=\"300\" src=\"https:\/\/www.realtyexecutives.com\/blog\/wp-content\/uploads\/2021\/12\/Blog-Images-56-1.png\" alt=\"a wooden house and a calculator symbolizing closing costs\" class=\"wp-image-5299\" srcset=\"https:\/\/www.realtyexecutives.com\/blog\/wp-content\/uploads\/2021\/12\/Blog-Images-56-1.png 450w, https:\/\/www.realtyexecutives.com\/blog\/wp-content\/uploads\/2021\/12\/Blog-Images-56-1-300x200.png 300w\" sizes=\"(max-width: 450px) 100vw, 450px\" \/><\/figure><\/div>\n\n\n\n<p>The process of buying a home requires many steps. One of the final ones is paying the closing costs on your new house. Here is everything you need to know about these expenses. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What Are Closing Costs?<\/strong><\/h2>\n\n\n\n<p>Closing costs are the fees\nyou owe at the end of a real estate transaction. Your lender will provide you\nwith an estimate after receiving your mortgage application. In the U.S, the\naverage <a href=\"https:\/\/www.businessinsider.com\/personal-finance\/average-closing-costs\">closing cost is $6,087<\/a> with taxes. Yet, the price will vary based on several\nfactors, such as your home\u2019s purchase price and the type of loan.<\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What\u2019s Included in the Cost?<\/strong><\/h2>\n\n\n\n<p>The expenses cover all the fees necessary\nto close on a home, <a href=\"https:\/\/www.realtyexecutives.com\/office\/associates-ontario\/selling-your-home-closing-costs\">excluding your down payment<\/a>. They are broken into three categories: lender fees, third-party fees,\nand prepaid items. Here are some of the typical costs in each group.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>1. Lender Fees<\/strong><\/h3>\n\n\n\n<p>These include charges for underwriting and\nprocessing your loan. They help brokers source essential documents, such as\nbank statements. In addition, they cover the cost to verify information on your\nloan application. You will also have an origination fee, which allows the\nlender to set up your loan. It\u2019s usually <a href=\"https:\/\/www.investopedia.com\/terms\/o\/origination-fee.asp#:~:text=An%20origination%20fee%20is%20typically,for%20processing%20a%20loan%20application.\">about 0.5% to 1%<\/a> of your loan amount.<\/p>\n\n\n\n<p>Here are some other expenses to expect from\nyour lender:<\/p>\n\n\n\n<ul><li>Administrative fees<\/li><li>Application and\nlock-in fees<\/li><li>Loan level price\nadjustment<\/li><li>Discount fee<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>2. Third-Party Costs<\/strong><\/h3>\n\n\n\n<p>These expenses come from outside companies\ninvolved in the closing process. For example, your credit bureau <a href=\"https:\/\/www.consumerfinance.gov\/ask-cfpb\/how-much-does-it-cost-to-receive-a-loan-estimate-en-2003\/\">will charge a $30 fee<\/a> for pulling your credit report. You will also owe an appraiser cash\nfor determining the market value of your house. In addition, there\u2019s a title\nsearch cost to check for any outside ownership claims to your property.<\/p>\n\n\n\n<p>Here are some more third-party charges to\nbudget for:<\/p>\n\n\n\n<ul><li>Escrow fee<\/li><li>Flood certification<\/li><li>Attorney fees<\/li><li>HOA dues<\/li><li>Survey fee<\/li><li>Pest inspection fee<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>3. Prepaid Expenses<\/strong><\/h3>\n\n\n\n<p>Homeowners pay for property taxes and\nhomeowners insurance upfront when closing a loan. You also pay them monthly to\nprotect your home from potential damage or tax foreclosure. The average price\nof homeowners insurance <a href=\"https:\/\/www.businessinsider.com\/personal-finance\/average-homeowners-insurance-cost\">is around $1,015<\/a> a year. If you live in an area prone to inclement weather, also invest\nin flood insurance.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>How to Reduce Closing Costs<\/strong><\/h2>\n\n\n\n<p>With multiple expenses, your closing costs\ncan start to add up. Here are a few tips to help you lower your price.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>1. Check Out Multiple Lenders<\/strong><\/h3>\n\n\n\n<p>Before choosing a lender, shop around and\ncompare fees. Check out banks or credit unions first. Look for mortgage lenders\noffering low fees and competitive interest rates. Ask them important questions,\nsuch as how long the process is expected to take. Once you have selected an\nagent, improve your credit score and save for a down payment.<\/p>\n\n\n\n<p>Also, remember you don\u2019t have to use the\ninspector or insurance agent your broker recommends. Instead, do your research\nto find the right companies.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>2. Ask Your Seller for Help<\/strong><\/h3>\n\n\n\n<p>If you\u2019re on a tight budget, <a href=\"https:\/\/homesitedirect.com\/who-pays-closing-costs-on-a-house\/\">ask the seller to help cover<\/a> a portion of the closing costs. They can either accept or reject your offer.\nThis is less likely to be accepted in a seller\u2019s market, where it\u2019s easier for\nthe seller to find a motivated buyer in their desired timeframe.<\/p>\n\n\n\n<p>However, for homes on the market for\nlonger, a seller may be willing to compromise. If it\u2019s a competitive market,\nincrease your offer price to offset the closing costs. Make sure to talk with\nyour real estate agent before negotiating, as they can provide insight into\nwhether it\u2019s a good addition to the deal.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>3.&nbsp; Schedule Closing for the End\nof the Month<\/strong><\/h3>\n\n\n\n<p>Scheduling later allows you to save money\non prepaid interest charges. You\u2019re expected to cover any interest on your\nmortgage from the closing date until the end of the month. So, this way you\nonly pay the fee for a few days.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>4. Compare Your Loan Estimate and Disclosure Forms<\/strong><\/h3>\n\n\n\n<p>Carefully review your loan estimate to\nensure the fees are in order. Ask your lender to clarify any confusing charges.\nAlso, if you notice any new fees or inconsistencies, bring them to your\nlender\u2019s attention. Catching any errors can reduce costs and move the process\nalong.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>5. Negotiate Loan Fees<\/strong><\/h3>\n\n\n\n<p>Some lenders may try to add unnecessary\nfees, so if you notice these, speak up. Ask your lender to remove or reduce any\nduplicate charges. Compare <a href=\"https:\/\/www.realtyexecutives.com\/agent\/becky-petree\/blog\/10-questions-to-ask-a-mortgage-lender-do-you-know-them-all-\">your costs to other lenders\u2019 offers<\/a> to ensure you\u2019re getting a fair deal. Look out for excessive\nprocessing and documentation prices, which are common in underwriting fees.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>6.\u00a0Combine Closing Costs into Your Mortgage<\/strong><\/h3>\n\n\n\n<p>Some lenders might offer to pay your costs\nor roll them into your loan. Keep in mind you will still pay interest on the\nclosing costs, usually at a higher rate. Therefore, consider this option as a\nlast resort.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Preparing for Closing Costs<\/strong><\/h2>\n\n\n\n<p>Purchasing a house comes with multiple expenses, including closing costs. These expenses will cover fees for lenders and appraisers. Before you invest in your dream home, review this guide so you can start preparing your budget today. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>The process of buying a home requires many steps. One of the final ones is paying the closing costs on your new house. Here is everything you need to know about these expenses. What Are Closing Costs? Closing costs are the fees you owe at the end of a real estate transaction. Your lender will &hellip; <a href=\"https:\/\/www.realtyexecutives.com\/blog\/how-much-can-you-expect-to-pay-in-closing-costs\" class=\"more-link\">Continue reading <span class=\"screen-reader-text\">How Much Can You Expect to Pay in Closing Costs<\/span> <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":10,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[25,835],"tags":[355,661,59],"yst_prominent_words":[5497,4267,2417,1241,1691,2681,5494,5491,546,3248,5492,5490,5495,2144,5493,5496,2339,1464,1461,796],"_links":{"self":[{"href":"https:\/\/www.realtyexecutives.com\/blog\/wp-json\/wp\/v2\/posts\/5297"}],"collection":[{"href":"https:\/\/www.realtyexecutives.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.realtyexecutives.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.realtyexecutives.com\/blog\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/www.realtyexecutives.com\/blog\/wp-json\/wp\/v2\/comments?post=5297"}],"version-history":[{"count":1,"href":"https:\/\/www.realtyexecutives.com\/blog\/wp-json\/wp\/v2\/posts\/5297\/revisions"}],"predecessor-version":[{"id":5300,"href":"https:\/\/www.realtyexecutives.com\/blog\/wp-json\/wp\/v2\/posts\/5297\/revisions\/5300"}],"wp:attachment":[{"href":"https:\/\/www.realtyexecutives.com\/blog\/wp-json\/wp\/v2\/media?parent=5297"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.realtyexecutives.com\/blog\/wp-json\/wp\/v2\/categories?post=5297"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.realtyexecutives.com\/blog\/wp-json\/wp\/v2\/tags?post=5297"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.realtyexecutives.com\/blog\/wp-json\/wp\/v2\/yst_prominent_words?post=5297"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}