Have You Saved Enough For Closing Costs

Dated: 01/24/2017

Views: 79

Have You Saved Enough for Closing Costs? | MyKCM

There are many potential homebuyers, and even sellers, who believe that they need at least a 20% down payment in order to buy a home or move on to their next home. Time after time, we have dispelled this myth by showing that many loan programs allow you to put down as little as 3% (or 0% with a VA loan).

If you have saved up your down payment and are ready to start your home search, one other piece of the puzzle is to make sure that you have saved enough for your closing costs.

Freddie Mac defines closing costs as:

“Closing costs, also called settlement fees, will need to be paid when you obtain a mortgage. These are fees charged by people representing your purchase, including your lender, real estate agent, and other third parties involved in the transaction. Closing costs are typically between 2 and 5% of your purchase price.”

We’ve recently heard from many first-time homebuyers that they wished that someone had let them know that closing costs could be so high. If you think about it, with a low down payment program, your closing costs could equal the amount that you saved for your down payment.

Here is a list of just some of the fees/costs that may be included in your closing costs, depending on where the home you wish to purchase is located:

  • Government recording costs

  • Appraisal fees

  • Credit report fees

  • Lender origination fees

  • Title services (insurance, search fees)

  • Tax service fees

  • Survey fees

  • Attorney fees

  • Underwriting fees

Is there any way to avoid paying closing costs?

Work with your lender and real estate agent to see if there are any ways to decrease or defer your closing costs. There are no-closing mortgages available, but they end up costing you more in the end with a higher interest rate, or by wrapping the closing costs into the total cost of the mortgage (meaning you’ll end up paying interest on your closing costs).

Home buyers can also negotiate with the seller over who pays these fees. Sometimes the seller will agree to assume the buyer’s closing fees to get the deal finalized, which is known in the industry as ‘seller’s concession.’

Bottom Line

Speak with your lender and agent early and often to determine how much you’ll be responsible for at closing. Finding out you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to.

Bonnie Lelak

Experience with regular home sales, short sales, foreclosures, HUD homes, no down payment program homes, investors who flip homes or buy rentals, commercial properties, land sales, lake front properti....

Want to Advertise on this Site?

Latest Blog Posts

Rising Home Prices Mean Great News For Homeowners

Recently there has been a lot of talk about home prices and if they are accelerating too quickly. As we mentioned before, in some areas of the country, seller supply (homes for sale) cannot

Read More

US Housing Inventory Hits A New Low List Your House TODAY

Every summer, families across the country decide if this will be the year they sell their current house and move into their dream home.Mortgage rates have hovered around 4% for all of,

Read More

Singles Are Falling For Their Dream Home First

Some Highlights:According to NAR’s Profile of Home Buyers & Sellers, the share of recent homebuyers who were single at the time of purchase held steady at 24% last year.The percentage of-

Read More

84 Of Americans Believe Buying A Home Is A Good Financial Decision

According to the National Association of Realtors®’ 2017 National Housing Pulse Survey, 84% of Americans now believe that purchasing a home is a good financial decision. This is the

Read More